HISTORY  OF 
CANADIAN  WEALTH 


BY 


GUSTAVUS  MYERS 


VOL.  I 


CHICAGO 

CHARLES  H.  KERR  &  COMPANY 
1914 


s 


Copyright  1914 
BY  GUSTAVUS  MYERS 


All  Rights  Reserved  by  Gustavus  Myers 

Including  that  of  Translation  into  Foreign 

Languages,  iacluding  the  Scandinavian 


CONTENTS 

CHAPTER  PAGE 

I  THE  QUEST  OF  TRADE  AND  NEW  SOURCES  OF  WEALTH  .     .      i 

II    THE  ECCLESIASTICAL  AND  FEUDAL  LORDS 16 

III  THE  HUDSON'S  BAY  COMPANY 38 

IV  WARS  OF  THE  FUR  TRADERS  AND  COMPANIES 48 

V    THE  LANDED  AND  MERCANTILE  OLIGARCHY 63 

VI    THE  LANDED  PROPRIETORS 80 

VII    REVOLT  AGAINST  FEUDALISM 97 

VIII  SOVEREIGNTY  OF  THE  HUDSON'S  BAY  COMPANY     .     .     .     .114 

IX  PASSING  OF  THE  HUDSON'S  BAY  COMPANY'S   SOVEREIGNTY  132 

X    INCEPTION  OF  THE  RAILROAD  POWER 150 

XI    FIRST  PERIOD  OF  RAILWAY  PROMOTERS 168 

XII,    CONTEST  FOR  THE  PACIFIC  RAILWAY 218 

XIII  ERA  OF  RAILWAY  MAGNATES 244 

XIV  PROGRESS  OF  THE  RAILWAY  LORDS 264 

XV    EXTENSION  OF  RAILWAY  POSSESSIONS 283 

XVI  APPROPRIATION  OF  COAL,  TIMBER  AND  OTHER  LANDS  .     .     .  301 

XVII    DISTRIBUTION  OF  RAILWAY  SUBSIDIES 320 


• 


PREFACE 

The  rapid  concentration  of  wealth  in  Canada  is  no  mere 
fancy.  Already,  it  is  estimated,  less  than  fifty  men  control 
$4,ooo,ooo,ocx),  or  more  than  one-third  of  Canada's  material 
wealth  as  expressed  in  railways,  banks,  factories,  mines,  land 
and  other  properties  and  resources. 

To  say  that  this  small  group  of  individuals  control  so  vast 
a  wealth  and  the  agencies  of  its  production  does  not 
imply  that  they  own  it  all.  Between  ownership  and  control 
there  is  a  difference,  yet  the  reverse  of  that  commonly  sup- 
posed. By  means  of  their  control  of  financial  markets  and 
distributive  systems,  a  small  number  of  men  may  effectively 
control  sources  of  wealth  which  still  may  remain  under  in- 
dividual ownership,  as  witness  the  case  of  the  farms,  of  which 
control  farmers  throughout  Canada  are  bitterly  complaining. 
Also  it  is  not  necessary  for  magnates  to  own  all  of  the  stock 
of  railroads,  banks,  factories  and  mines ;  much  of  that  owner- 
ship may  be  distributed  among  small  shareholders,  yet  by  their 
predominantly  large  holdings  of  stock,  and  through  their 
power  of  directorship,  those  magnates  can  and  do  control 
those  diversified,  and  often  financially  interconnected,  sources 
of  wealth. 

The  process  of  centralization  of  wealth  has  been  steadily 
going  on  for  nearly  thirty-five  years.  The  removal  of  un- 
restricted competition  was  first  evidenced  in  the  case  of  the 
railways  of  Canada.  Beginning  in  about  the  year  1879,  a 
considerable  number  of  smaller  and  formerly  independent 
railways  (some  of  which  had  already  amalgamated)  were 
absorbed  by  the  large  systems  such  as  the  Grand  Trunk 


PREFACE 

Railway,  and  later  by  the  Canadian  Pacific  Railway,  and 
other  railways.  Of  more  than  140  separate  and  privately 
owned  railways  chartered  and  constructed  at  different  times, 
a  large  number  are  now  integral  parts,  either  by  purchase  or 
by  lease,  of  the  main  and  great  railway  systems  in  Canada. 

The  highly  centralized  character  of  the  Canadian  banks  is 
well  known ;  the  branches  of  the  important  banks  extend  over 
an  immense  territory;  twenty-six  of  these  institutions  have 
2,888  branches;  the  Royal  Bank  alone  has  338  branches,  and 
the  Bank  of  Commerce  367. 

Perhaps  nowhere  in  the  world  can  be  found  so  intensive 
a  degree  of  close  organization  as  among  the  bank  interests 
in  Canada.  In  the  United  States  there  are  no  less  than 
18,000  banking  institutions,  of  which  about  6,000  are  under 
Federal  charters,  the  remainder  under  State  Laws.  While 
a  small  group  of  financial  industrial  magnates  exercise  a  pre- 
ponderating control  over  the  large  banks,  and  in  turn  prac- 
tically sway  many  of  the  small  banks  in  the  United  States, 
and  thereby  concentrate  in  themselves  the  powers  of  a  financial 
Trust,  still  the  control  there  is  nothing  like,  in  compact  cen- 
tralization, that  existing  in  Canada.  The  immense  capacity 
of  this  concentration  in  controlling .  the  finances  and  every 
sphere  of  activity  dependent  upon  finance,  is  so  obvious  that 
it  requires  no  explanation.  To  these  ramifications  of  power 
is  added  another  huge  power  possessed  by  the  Canadian  banks. 
This  is  their  privilege,  allowed  by  law,  of  putting  out  enor- 
mous quantities  of  their  privately-issued  money,  or,  in  other 
words,  bank  notes  —  a  power  far  exceeding  even  the  great 
power  held  by  banks  in  other  countries. 

Of  the  rapidity  of  concentration  of  industrial  concerns  in 
Canada  much  less  is  generally  known.  From  January,  1909, 
to  January,  1913,  there  were  56  industrial  mergers  or  amalga- 
mations which  absorbed  248  individual  companies.  The  total 
capitalization  of  206  of  these  individual  companies  was  about 


PREFACE 

$167,000,000;  this  amount  was  increased  with  the  amalga- 
mating process.  The  authorized  capitalization,  including 
bonds,  of  these  56  industrial  mergers  was  almost  $457,000,000, 
or  to  be  precise,  $456,938,266.  Many  of  the  large  individual 
companies  thus  absorbed  were  themselves  the  outgrowth  of 
previous  combinations. 

Aside  from  the  consideration  of  native  Canadian  capital, 
the  amount  of  British  capital  put  in  Canada  has  been  stu- 
pendous. In  1911,  Sir  George  Paish,  one  of  the  editors  of 
the  London  Statist,  estimated  that  £372,541,000  of  British 
capital  had  gone  to  Canada,  chiefly  in  the  form  of  investments ; 
of  that  sum  £223,740,000  was  represented  by  investments  in 
Canadian  railways.  Since  1911,  at  least  £120,000,000  more 
of  British  capital  has  been  placed  in  Canada.  The  total  of 
British  capital  in  Canada  is,  therefore,  more  than  $2,000,000,- 
ooo.  Capital  in  Canada  from  various  Continental  countries  of 
Europe  is  computed  at  about  $140,000,000.  Of  the  $500,000,- 
ooo  of  United  States  capital  active  in  Canada,  $180,000,000 
is  represented  in  300  factories  which,  to  a  great  extent,  are 
branches  of  the  American  Trusts. 

This  process  of  centralization  is,  it  is  needless  to  say,  still 
continuing  and  has  by  no  means  reached  its  culmination. 
Economic  forces  are  more  powerful  than  statute  laws,  par- 
ticularly so  seeing  that  what  is  called  the  machinery  of 
Government  is  administered  at  all  times  either  directly  by 
the  beneficiaries  or  by  the  representatives  of  those  ruling 
forces,  no  matter  by  what  political  name  they  may  be  pleased 
to  call  themselves. 

In  such  an  era,  with  fundamental  economic  questions  — 
that  is  to  say,  problems  of  existence  itself  —  pressing  harder 
and  harder  upon  the  attention  of  those  that  produce  the 
wealth,  such  a  work  as  this  is  essential  as  a  means  of  diffusing 
information.  Since  the  control  of  so  vast  an  aggregation  of 
wealth  is  centered  in  so  few  hands,  the  questions  of  whence 

iii 


PREFACE 

came  these  overawingly  great  private  fortunes  and  of  the 
evolution  of  this  centralized  wealth  become  of  paramount 
interest.  What  was  the  origin  of  much  of  these  mighty 
masses  of  capital?  What  their  particular  sources?  By  what 
means  was  this  immense  material  wealth  extracted,  by  what 
methods  possessed? 

To  give  a  vital  survey  of  these  developments  is  the  pur- 
pose of  this  work.  Necessarily,  the  investigation  takes  us 
back  to  remote  times,  for  the  aggregations  of  wealth  that  we 
see  today  are  not  in  essence  a  sudden  appearance,  but  are  the 
result  of  cumulative  methods,  processes  and  transactions  ex- 
tending through  centuries. 

It  will  be  seen  that  from  the  earliest  searchings  for  wealth 
in  Canada  to  the  present  time  there  has  been  a  vital,  definite 
connection,  the  developments  of  each  successive  period  bearing 
a  close  relevancy  to  those  preceding.  From  primitive  powers 
conferred,  and  from  fortunes  amassed  in  fur  trading,  land  and 
commerce,  came  the  wealth  often  invested  later  in  mercantile 
establishments,  land  companies,  banks,  railway  projects,  mines 
and  factories;  and  all  of  these  pyramidically  reproduced  still 
other  accumulations  of  wealth  progressively  invested  and  re- 
invested. Did  we  not  trace  this  wealth  to  its  primary  sources, 
and  give  a  continuous  depiction  of  its  development,  the  narra- 
tive would  be  headless,  unfinished  and  disconnected,  and 
leave  some  of  the  most  important  facts  enshrouded  in  mystery. 

Although  long  ago  it  was  recognized  that  they  who  control 
the  means  by  which  a  dependent  class  must  live,  control  the 
livelihood  and  conditions  of  that  class,  yet  it  is  not  inordi- 
nately astonishing  that  thus  far  no  economic  work  tracing  the 
sources  of  these  accumulations  of  private  wealth  in  Canada 
has  preceded  these  present  volumes. 

The  reasons  for  this  deficiency  are  not  obscure.  One  rea- 
son is  that  the  general  attention  has  hitherto  been  focussed 
on  other  subjects  and  issues,  ignoring  the  economic  factors, 

iv 


PREFACE 

the  all-important  significance  of  which  was  not  adequately 
understood.  With  the  growth  of  general  intelligence  and 
the  accompanying  great  pressure  of  economic  considerations, 
this  understanding  has  been  intensified,  and  is  becoming  still 
more  so. 

Another  reason  has  been  that  the  sources  of  information, 
such  as  histories,  upon  which  the  general  public  has  had  to  de- 
pend for  knowledge,  have  been  absurdly  and  erroneously  made 
to  revolve  around  personalities  instead  of  social  and  economic 
forces.  Various  arid  volumes  have  come  bulkily  from  the 
presses,  but  they  either  give  no  account  of  the  currents  of 
these  successive  economic  forces,  or  they  but  incidentally 
mention  only  a  few,  vague,  isolated  facts.  In  the  mistaken 
aim  to  present  personalities  as  the  determiners  of  events,  these 
writers  have  far  subordinated  or  ignored  the  realities, 
unconscious  of  the  fact  that  such  personalities  are  but  the 
creatures  of  distinct  and  often  sharply  contesting  economic 
forces. 

Hence  it  is  that  to  get  the  underlying,  authentic  facts  —  as 
much  as  possible,  at  least,  from  the  available  original  sources 
—  the  author  of  these  present  volumes  has  had  to  dig  labo- 
riously into  the  Canadian  archives,  and  tediously  explore  great 
numbers  of  official  documents.  Great  as  is  the  mass  of  facts 
here  related,  it  can  be  well  understood  that  the  entire  range 
of  facts  covering  all  the  multitude  of  transactions  of  centuries 
can  never  be  given  in  full.  Many  of  them  never  found  their 
way  into  official  documents,  and  in  other  cases  important 
governmental  papers  and  returns,  embodying  certain  definite 
valuable  facts  and  connecting  links,  were  never  published. 

Nevertheless  a  myriad  of  documents  have  been  accessible 
to  anyone  animated  by  an  aim  to  make  a  sincere  quest  for  the 
facts.  That  many,  if  not  most  of  them,  have  never  hereto- 
fore been  consulted  is  a  striking  commentary  upon  the  char- 
acter of  conventional,  so-called  history.  Studiously  or 


PREFACE 

informingly  avoiding  the  basic  facts,  and  interpreting  human 
progress  and  activities  by  the  light  of  such  superficialities, 
these  products  (whatever  their  motive),  had  the  result  of 
conserving  outworn  traditions  and  perpetuating  fallacious 
conceptions. 

Expanding  intelligence,  however,  is  not  content  with  narra- 
tives obsolete  in  treatment,  misleading  in  substance  and  spirit- 
less in  character.  No  longer  is  the  diverting,  obscuring  or 
glozing  of  the  facts  accepted;  actualities,  not  appearances,  are 
demanded.  Having  a  knowledge  of  the  fundamental  facts  we 
can  be  prepared  to  reject  old  standards  and  forms  and  unsatis- 
factory systems.  We  can  then  also  rightly  comprehend  the 
nature  of  the  processes  that  have  resulted  in  conditions  as 
we  know  them,  and  can  directly  apply  that  knowledge  toward 
the  obliteration  of  all  that  stands  in  the  way  of  the  full,  un- 
shackled social,  industrial  and  intellectual  development  of 
mankind. 

GUSTAVUS  MYERS. 


HISTORY  OF  CANADIAN 
WEALTH 


CHAPTER  I 

THE  QUEST  OF  TRADE  AND  NEW  SOURCES 
OF  WEALTH 

When  the  Spanish  explorers  first  saw  the  mouth  of  the 
St.  Lawrence  River,  "  lined  with  high  mountains  and  covered 
with  snow,"  they  spontaneously  named  the  unappealing 
country  "  Acanada,"  signifying,  "  Here  is  nothing."  x 

The  first  sources  of  wealth  were  the  waters  of  the  ocean 
yielding  their  primitive  supplies  of  cod,  walrus  and  whale. 
Thither  came  vessels  from  Spain,  England,  France  and  Hol- 
land to  load  themselves  with  this  abundant  spoil  from  the 
Newfoundland  Banks.  The  great  demand  in  Roman  Catholic 
countries  for  fish  assured  certain  and  large  profits,  and  the 
prolific  supplies  of  oil  from  the  whale  presented  tempting  op- 
portunities to  the  roving  mariners;  from  a  single  whale  as 
many  as  four  hundred  barrels  of  oil  were  frequently  taken. 
There  was  the  vast  wealth  of  the  sea,  but  the  annoying  prob- 
lem to  these  fishing  traders  and  colonizers  was  how  to  get  the 
necessary  contingent  of  maritime  laborers. 

1  De  Meulles  to  the  King  of  France,  1684,  Report  on  Canadian 
Archives,  1899  Vol.,  p.  43.  The  volumes  of  these  archives  are  not 
numbered  but  bear  the  date  of  the  year  in  which  they  were  issued  by 
the  Archives  Bureau  of  the  Dominion  Government. 

I 


2  THE  QUEST  OF   TRADE 

Convicts  Impressed  as  Colonists 

A  distant,  supposedly  barren  land  to  which  it  required  a 
hundred  days  or  more  of  tedious  sailing  to  get,  did  not  allure 
European  workers.  Cartier  showed,  in  1541,  how  it  was  pos- 
sible to  make  up  the  deficiency  in  manning  his  armed  expedi- 
tion when  he  impressed  the  convicts  from  the  jails  for 
maritime  service.2  These  unfortunates  were  not  convicts  in 
the  modern  sense ;  at  a  time  when  the  slightest  theft  was  pun- 
ishable by  hanging,  and  begging  was  a  crime,  the  term  convict 
covered  conviction  for  even  the  pettiest  and  most  inconsequen- 
tial offenses.  When,  in  1598,  La  Roche  was  planning  an  expe- 
dition to  Newfoundland  he  secured  official  permission  to  take 
"  criminals "  from  the  jails  of  Brittany  and  Normandy ;  he 
picked  out  "  two  hundred  sturdy  beggars,  male  and  female," 
but  took  only  sixty  of  them  along,  and  of  these  forty-eight  died 
during  the  rigors  of  the  winter  on  Sable  Island,  and  one  was 
hanged  for  theft.3 

In  1578  there  were  thirty  to  fifty  English  fishing  sail  on 
the  Newfoundland  Banks,  and  perhaps  two  hundred  vessels 
from  Spain.  Twenty  vessels  from  Biscay  were  engaged  in 
whale  hunting.  Seven  years  later  the  fishing  fleet  numbered 
three  hundred  Spanish,  French,  English  and  Dutch  vessels, 
the  crews  of  which  were  armed  for  possible  fighting  service. 
A  quarter  of  a  century  later  the  French  fishing  fleet  alone 
comprised  six  hundred  vessels,  or  nearly  that  number. 

From  these  fishing  expeditions  developed  an  auxiliary  traffic 
which  subsequently  became  the  principal  trade,  producing 
colossal  profits,  engendering  conflicts  and  wars,  and  directly 
and  indirectly  causing  a  great  and  continuous  sacrifice  of 
human  life.  This  was  the  fur  trade,  the  main  and  long-con- 
tinued source  of  primitive  accumulation  of  wealth  in  Canada, 

2  Biggar's  Early  Trading  Companies  of  New  France,  p.  15. 

3  Ibid.,  pp.  41-42. 


THE  QUEST  OF   TRADE  3 

of  which  wealth  the  great  bulk  went,  during  centuries,  to 
European  capitalists  to  be  invested  successively  in  land,  trade» 
factories,  banks,  transportation  systems  and  other  channels 
both  in  Europe  and  in  Canada  and  in  other  countries. 

The  Fur  Trade  and  the  Trading  Companies 

Going  ashore  to  dry  fish,  fishing  merchants  soon  learned 
from  the  Indians  of  the  prevalence  of  fur-bearing  animals. 
In  the  hunting  of  these  the  Indians  were  adepts.  Innocent 
of  the  mercantile  value  of  either  their  furs  or  fabricated  com- 
modities, the  aborigines  were  easily  persuaded  into  exchanging 
furs  for  trivial  trinkets.  In  those  days,  a  beaver  skin  could 
be  bought  with  a  needle,  a  harness  bell  or  a  tin  mirror.4  The 
arts  of  persuasion  were  assisted  by  gratuities  of  liquor. 
When  the  fishing  fleets,  loaded  with  furs,  returned  to  Europe, 
the  news  excited  the  cupidity  of  some  of  the  more  enterprising 
of  the  sea-port  town  merchants  who  began  to  estimate  rightly 
the  great  wealth-producing  possibilities  of  the  fur  trade. 

The  first  fur-trading  company  organized  was  the  Company 
of  Canada,  promoted  by  David  Kirke  and  Associates.  Char- 
tered by  King  Charles  I,  it  was  vested  with  the  right  to  ex- 
ploit the  fur  trade  of  the  St.  Lawrence,  but  its  operations 
came  to  a  sudden  end  when,  in  1632,  England  restored  Canada 
to  France. 

In  the  interval,  Champlain's  Company,  that  of  Rouen  and 
St.  Malo,  had  been  established  in  1614;  its  shares  were  ap- 
portioned among  the  merchants  of  those  two  towns.  The 
charter  of  this  Company  was  given  upon  the  express  con- 
dition of  certain  colonizing  performances,  but  the  obligation 
was  not  taken  seriously  by  the  company,  which  confined  itself 

4  So,  in  his  Memoirs  concerning  Canada,  wrote  De  la  Chesnaye,  who 
had  come  to  Canada  to  represent  the  interests  of  the  Company  of 
Rouen. —  Report  on  Canadian  Archives,  1899  Supplement,  p.  39. 


%  THE  QUEST  OF  TRADE 

to  sending  to  Canada  one  solitary  family.  Its  monopoly  was 
abolished  in  1620.  The  next  year  a  charter  was  granted,  on 
the  customary  terms  and  requirements  of  introducing  settlers 
and  missionaries,  to  the  Company  of  De  Caen,  organized  by 
William  De  Caen  and  his  nephew,  merchants  of  Rouen.  This 
Company  absorbed  Champlain's,  and  the  united  corporations 
carried  on  their  trade  until  1633,  although  not  in  its  later 
years  without  competition  from  a  rival  trading  company. 

Enormous  Powers  of  Monopolies 

This  competitor  was  the  Company  of  New  France,  estab- 
lished in  1627  by  Cardinal  Richelieu. 

Unlike  the  previous  companies,  the  Company  of  New 
France  was  not  owned  by  merchants  of  the  smaller  towns; 
its  principal  stockholders  were  Parisians,  who,  seeing  the  rich- 
ness and  extent  of  the  fur  trade,  aimed  at  concentrating  the 
monopoly  in  themselves.  They  received  a  full  monopoly  for 
15  years  with  full  ownership  of  the  entire  valley  of  the  St. 
Lawrence.  For  these  exclusive  grants  they  were  required 
to  introduce  three  hundred  colonists  every  year  up  to  1643  — 
an  obligation  which  was  only  nominally  carried  out,  yet  the 
Company  continued  to  hold  its  monopoly  until  1663. 

Following  the  cancellation  of  the  charter  of  the  Company 
of  New  France,  came  the  Company  of  the  West  Indies,  char- 
tered by  Louis  XIV  in  1664.  Its  alleged  object  was  the  con- 
version to  Christianity  of  the  Indian  tribes,  but  its  privileges 
were  enormous,  covering  trade  in  the  West  Coast  of  Africa, 
the  East  Coast  of  South  America,  Canada,  Acadia  and  New- 
foundland. The  stock  of  this  Company  seems  to  have  been 
used  largely  for  stock-jobbing  purposes;  in  spite  of  its  vast 
powers  and  privileges,  the  Company  did  not  flourish,  and  its 
charter  was  revoked  in  1675.  Various  other  companies  came 
into  existence,  the  most  important  of  which  was  the  French 


THE  QUEST  OF  TRADE  5 

East  India  Company.    This  corporation  had  the  sole  privilege 
of  exporting  beaver  from  Canada. 

Necessarily  all  of  these  companies  had  to  depend  to  a  con- 
siderable extent  for  their  supplies  of  furs  upon  individual  or 
itinerant  traders  who  roamed  afar  among  the  Indian  tribes, 
and  brought  back  their  bales  of  furs.  But  as  no  one  could 
trade  with  the  Indians  without  an  annual  license,  and  these 
licenses  were  annulled  at  will  by  the  French  officials  or  dis- 
tributed among  favorites,  the  state  of  the  fur  trade  was  one  of 
uncertainty.  Having  only  a  transient  permission,  the  French 
traders  followed  no  system  and  made  no  permanent  establish- 
ments of  any  importance,  but  went  whither  they  could  easily 
and  most  quickly  enrich  themselves.  This  was  even  more  so 
with  respect  to  the  illicit  traders  who,  denied  licenses,  carried 
on  the  trade  clandestinely. 

Debauching  the  Indians  with  Brandy 

The  principal  means  used  in  trading  with  the  Indians  was 
in  debauching  them  with  brandy,  and  then  swindling  them 
of  their  furs.  This  abuse  became  so  notorious  that  on  April 
17,  1664,  the  Sovereign  Council  issued  a  decree  prohibiting 
bartering  or  giving  intoxicating  drinks  to  the  Indians.5  This 
decree  was  called  forth  by  the  consequences  of  debauching  an 
innocent  race,  hitherto  immune  from  the  knowledge  of  liquor, 
and  the  demoralization,  atrocities  and  conflicts  following  in  its 
wake.  The  traders  ranging  the  woods,  however,  were  far 
away  from  the  reach  of  enforcing  officials,  and  continued  their 
debauching  process. 

On  November  10,  1668,  pleading  as  an  excuse  that  the  free- 
dom of  sale  of  strong  drink  would  cause  less  demoralization 
than  a  restraint  impossible  to  enforce,  although  admitting  the 
pernicious  influence  of  drink  upon  the  Indians,  the  Sovereign 

6  Report  on  Canadian  Archives,  1899  Vol.,  p.  54. 


6  THE   QUEST   OF   TRADE 

Council  gave  permission  to  all  Frenchmen  inhabiting  Canada 
to  sell  and  deliver  strong  drinks  to  the  Indians.0  A  proclama- 
tion the  next  year  forbade  the  lying  in  wait  for  the  Indians  in 
the  woods  or  going  to  meet  them,  and  prohibited  drunkenness 
among  the  Indians.7 

Immorality,  Theft  and  Murder 

"  What  does  the  most  harm  here,"  wrote  Mother  Mary  of 
the  Incarnation,  Quebec,  in  1669,  "  is  the  traffic  in  wine  and 
brandy.  We  preach  against  those  who  give  these  liquors 
to  the  savages;  and  yet  many  reconcile  their  consciences  to 
the  permission  of  this  thing.  They  go  into  the  woods  and 
carry  drinks  to  the  savages  in  order  to  get  their  furs  for 
nothing  when  they  are  drunk.  Immorality,  theft,  and  mur- 
der ensue.  .  .  .  We  had  not  yet  seen  the  French  commit  such 
crimes,  and  we  can  only  attribute  the  cause  of  them  to  the 
pernicious  traffic  in  brandy."  8 

Writing  on  November  2,  1672,  to  Colbert,  Minister  of 
Finance  under  Louis  XIV,  Governor  Frontenac  outlined  the 
measures  he  had  taken  to  keep  in  check  the  "  ever-active  am- 
bition of  the  Jesuits  "  and  he  continued,  "  But  whatever  pre- 
tense they  manifest,  they  will  not  extend  that  language 
[French],  and  to  speak  frankly  to  you,  they  think  as  much 
about  the  conversion  of  Beaver  as  of  souls ;  for  the  majority 
of  their  missions  are  pure  mockeries  .  .  ."  9  In  another  letter 
to  Colbert,  in  1674,  Frontenac  told  of  his  difficulties  with  the 
Jesuits  whom  he  had  spoken  to  in  vain  regarding  the  state  of 
the  missions,  "  they  having  declared  to  me  that  they  were  here 
only  to  endeavor  to  instruct  the  Indians,  or  rather  to  get 

«Ibid.,  p.  55. 
7  Ibid.,  p.  56. 

8De  Brumath's  Bishop  Laval,  p.  113. 

9  Paris  Documents,  Documents  Relating  to  the  Colonial  History  of 
the  State  of  New  York,  Vol.  IX,  p.  68. 


THE    QUEST   OF    TRADE  7 

Beavers,  and  not  to  be  parish  priests  to  the  French."  10  But 
the  Governor  was  himself  accused  by  Duchesenau, —  appointed 
on  May  30,  1675,  Intendant  of  Police,  Justice  and  Finance  in 
Canada/ —  of  being  interested  in  the  Indian  trade  illicitly ;  that 
he  had  intermediaries  to  extort  and  receive  presents  and 
bribes  of  packages  of  beaver  of  large  value  which  his  hench- 
men disposed  of  for  him.11 

Trading  Interests  Supreme 

We  are  told  that  in  1677  when  Bishop  Laval  complained  to 
King  Louis  XIV  of  the  widespread  debauchery,  Colbert  or- 
dered an  inquiry  to  be  made  by  twenty  competent  persons  in 
the  colony.  "  Unfortunately,"  says  De  Brumath,  "  the  per- 
sons chosen  for  this  enquiry  were  engaged  in  trade  with  the 
savages;  their  conclusions  must  necessarily  be  prejudiced." 
Describing  how  their  report  minimized  the  extent  of  the  traffic 
in  strong  drink,  De  Brumath  goes  on :  "  We  cannot  help 
being  surprised  at  such  a  judgment  when  we  read  over  the 
memoirs  of  the  time,  which  all  agree  in  deploring  the  sad  re- 
sults of  this  traffic.  The  most  crying  injustice,  the  most  re- 
volting immorality,  settlements  devastated  by  drunkenness, 
agriculture  abandoned,  the  robust  portion  of  the  population 
ruining  its  health  in  profitless  expeditions ;  such  were  some  of 
the  most  horrible  fruits  of  alcohol.  And  what  do  we  find  as 
a  compensation  for  so  many  evils?  A  few  dozen  rascals 
enriched,  returning  to  squander  in  France  a  fortune  shame- 
fully acquired.  .  .  ." 12 

10  Ibid.,  p.  120. 

11  Duchesenau  to  De  Seignelay,  Nov.  10,  1679,  Ibid.,  p.  135. 

12  Bishop   Laval,  p.    173.    The  "  Twenty  Principal   Inhabitants "   re- 
ported that  the  prohibition  of  the  trade  in  spirits  "would  ruin  trade, 
without  any  equivalent  and  without  remedying  the  evils  .    .    .  because 
the  English  and  Dutch  sell  it  freely  to  the  Indians,  and  will  attract 
to  themselves  both  the  Indians  and  the  trade  in   furs." — See  Report 
on  Canadian  Archives,  1900  Vol.,  p.  71. 


8  THE   QUEST   OF   TRADE 

Laval's  emissary  to  Colbert  was  Dudouyt,  a  priest,  who  has 
transmitted  to  us  a  long  account  of  the  interview,  ".  .  .  On 
this  point,"  he  wrote  to  Laval,  "  I  told  him  that  the  inclina- 
tion of  the  Indians  for  becoming  intoxicated  is  much  stronger 
than  that  of  the  people  of  Europe ;  that  they  have  much  greater 
weakness  in  resisting  it;  that  it  is  universal,  and  that  the  dis- 
orders committed  by  the  Indians  are  more  aggravated,  and 
this  I  proved  to  him,  my  Lord,  in  this  way :  If,  in  a  bourgade, 
there  be  liquor  freely  accessible  to  the  Indians  they  usually  all 
become  intoxicated,  old,  young,  great,  small,  women  and  chil- 
dren, so  that  there  is  hardly  one  left  unintoxicated ;  that  if 
there  be  liquor  for  two  days,  drunkenness  will  continue  for 
two  days;  if  there  is  enough  for  a  week,  it  will  last  a  week; 
if  for  a  month,  it  will  last  a  month;  that  we  do  not  see  in 
Europe.  ...  It  means,  my  Lord,  persons  who  wish  to  have 
beavers  from  the  Indians  by  means  of  liquor  without  respect 
to  the  risk  of  disorders  they  cause  by  that  means,  and  without 
regard  to  their  own  salvation  or  that  of  the  Indians."  Dud- 
ouyt told  Colbert  that  Intendant  Talon  had  caused  the  removal 
of  all  of  the  penalties  and  ordinances  against  the  excessive  use 
of  liquors,  and  that  moderation  was  necessary.13 

Commenting  upon  this  protest,  Charlevoix  later  wrote  that 
the  secret  had  been  discovered  by  the  fur  traders  of  how 
to  persuade  the  King's  Council  that  the  trade  was  absolutely 
necessary  to  attach  the  natives  to  the  French  interests,  and 
of  how  to  represent  successfully  that  the  abuses  were  greatly 
exaggerated.14 

Official  Participation  in  the  Fur  Frauds 

Duchesenau  wrote  from  Quebec,  November  10,  1679,  that 
he  had  done  his  best  to  prevent  the  interdicted  Indian  trade 

13  Report  on  Canadian  Archives,  1885  Vol.,  p.  ci. 
.,  p.  x. 


THE  QUEST  OF   TRADE  9 

from  being  carried  on  by  illicit  traders,  but,  "All  that  has 
been  in  vain,  inasmuch  as  several  of  the  most  considerable 
families  in  this  country  are  interested  therein,  so  that  the 
Governor  lets  them  go  on,  and  even  shares  in  their  profits."  15 

In  the  next  year  Duchesenau  informed  the  French  Govern- 
ment that  there  were  great  complaints  against  Governor  Perrot 
of  Montreal,  who  had  occupied  that  post  since  1670. 

The  complaints  against  Perrot  were  "  as  well  on  account  of 
his  violent  conduct  as  for  his  open  trading.  He  is  accused 
of  having  excited  a  sedition  at  Montreal  with  a  view  to  obtain 
the  repeal  of  the  King's  Ordinance  forbidding  subordinate 
Governors  imprisoning  people.  This  sedition  I  allayed." 
Duchesenau  went  on  to  remark  that  Monsieur  Dollier,  Superior 
of  the  Montreal  Seminary,  "  while  an  honest  man,"  was  not 
altogether  a  stranger  to  illicit  enterprises  in  fur  trading.18 
Perrot  was  accused  of  pocketing  40,000  livres  in  a  single  year 
for  his  fur-trading  operations,  but  denied  that  the  amount  was 
that  large.17 

Between  Frontenac,  Governor  and  Lieutenant-General  of 
Canada,  and  Intendant  Duchesenau  an  embroilment  existed  as 
to  the  respective  rights  and  priority  of  each.  It  was  in  the 
course  of  this  dispute  that  Duchesenau  reported  the  prevail- 
ing abuses.  He  described  the  traffic  of  carrying  brandy  to 
the  Indians,  and  intoxicating  them. 

"The  Missions,"  he  drily  wrote  on  November  13,  1680, 
"  cannot  be  too  much  encouraged  and  too  much  countenance 
be  given  to  the  gentlemen  of  St.  Sulpice  and  the  Jesuit  Fathers 
among  the  Indians,  inasmuch  as  they  not  only  place  the  coun- 

15  Paris  Documents,  Documents  Relating  to  the  Colonial  History  of 
the  State  of  New  York,  Vol.  IX,  p.  131. 

16  Ibid.,  p.  142. 

17  Perrot  was   later   required   to   face   charges.    Arrested   and   con- 
victed, he  was  imprisoned  nearly  a  year  in  Quebec,  and  later  sent  to 
the   Bastile   in   Paris.    A    favorite   at  court   where   he  had   powerful 
friends,  he  was  soon  released,  and  later  appointed  to  the  Governorship 
of  Acadia. 


IO  THE   QUEST  OF   TRADE 

try  in  security  and  bring  peltries  hither,  but  greatly  glorify 
God,  and  the  King,  as  eldest  son  of  the  Church,  by  reason  of 
the  large  number  of  good  Christians  formed  there."  18  He 
added  that  "  the  desire  of  making  money  everywhere  has  led 
the  Governor,  Sieurs  Perrot,  Boisseau,  and  De  Lut,  and 
Patron,  his  uncle,  to  send  canoes,  loaded  with  peltries,  to  the 
English."  The  report,  he  said,  was  notorious  that  60,000 
livres  worth  of  peltries  had  been  sent  thither ;  that  the  officials 
violated  their  own  edicts  by  selling  beaver  to  the  English  who 
paid  them  double  what  they  received  from  the  French  in 
Quebec.19 

Violence  Supports  Fraud 

"  Violence,  upheld  by  authority,  decides  everything,"  re- 
ported Duchesenau  in  his  Memoir.  The  Governor  did  as  he 
pleased,  and  knew  how  to  take  measures  to  prevent  complaints 
from  reaching  the  Government.  "  The  authority  with  which 
the  Governor  is  invested  is  an  easy  means  of  success  herein, 
because,  in  the  administration  of  justice  and  in  what  regards 
trade,  he  does  only  what  he  pleases,  and  in  one  or  the  other 
favors  only  those  whose  business  has  relation  to  his  specula- 
tions, or  who  are  interested  with  him.  The  force  he  has  at 
hand  sustains  his  interests,  and  he  employs  it  only  to  intimi- 
date the  people,  so  as  to  prevent  them  from  complaining,  or 
to  glaze  over  his  violences  by  exacting  from  individuals  false 
statements,  [by]  which  he  can  weaken  what  may  be  said 
against  him,  and  to  turn  whatever  he  does  to  his  own  advan- 
tage." 20 

18  Paris  Docs.,  Documents  Relating  to  the  Colonial  History  of  the 
State  of  New  York,  Vol.  IX,  p.  150.  Duchesenau's  Memoir.  In  1691 
the  Religieuses  Hospitalieres  of  Montreal  applied  for  and  obtained 
trading  licenses  on  the  ground  that  they  needed  funds  "to  assist  them 
in  the  re-establishment  of  their  house." — Rep.  on  Canadian  Archives, 
1899  Vol.,  p.  292. 

i*Ibid.,  p.  160. 

™Ibid.t  p.  157. 


THE   QUEST   OF   TRADE  II 

Dealing  with  the  quarrels  of  the  head  officials,  Edouard 
Richard  says  that  these  and  many  other  disputes  "  often  orig- 
inated in  commercial  rivalry.  The  profits  to  be  derived  by 
the  privileged  ones  from  the  beaver  trade  were  apparently  the 
most  seductive,  for  notwithstanding  the  reiterated  prohibitions 
and  threats  of  the  minister,  we  find  governors  and  intendants 
mutually  accusing  one  another  of  participating  in  the  trade  in 
an  underhand  manner."  21  Precisely  what  measure  of  weight 
can  be  put  to  all  of  these  charges  and  countercharges  it  is  now 
impossible  to  say,  but  so  far  as  Perrot  was  concerned  he 
carried  on  the  trade  with  flagrant  openness. 

So  great  was  the  general  scramble  on  the  part  of  all  classes 
to  participate  in  the  profits  of  the  fur  trade  that  farmers 
abandoned  their  farms  to  go  long  distances  hunting  or  trad- 
ing, against  which  practice  the  King  ordered  Frontenac,  in 
1672,  to  issue  the  most  stringent  injunctions.22  Agriculture 
and  manufacturing  were  considered  far  subordinate  by  the 
settlers  in  their  avidity  to  have  a  hand  in  the  fur  spoils,  al- 
though the  King  of  France  sought  repeatedly  to  encourage  the 
establishment  of  both. 


The  Fur  Traders  Dominate 

Thus,  the  dominating  trading  class  was  the  fur  traders; 
of  this  class  the  merchants  were  a  substantial  part,  pursuing 
their  search  for  wealth  with  the  most  unscrupulous  eagerness. 

The  King  had  put  in  practice  the  endowing  with  commod- 
ities of  soldiers  and  young  women  who  married,  and  the 
granting  of  certain  articles  to  new  immigrant  families.  Talon 
wrote  from  Quebec  to  Colbert  in  November,  1670,  that  this 
practice  "  is  not  agreeable  to  the  merchants,  who  would  like 
everything  to  be  got  from  themselves,  good  or  bad,  at  so  high 

21  Report  on  Canadian  Archives,  1890  Supplement,  p.  12. 
.f  1899  Vol.,  p.  58. 


12  THE  QUEST  OF  TRADE 

a  rate  that  it  would  require  double  the  expense  were  people 
reduced  to  what  they  would  wish."  23 

Constantly  committing  frauds  in  their  fur  dealings  with 
the  fur  companies,24  the  merchants,  at  the  same  time,  de- 
manded and  received  the  greatest  consideration,  and  filled  high 
official  posts.  Whatever  abuses  they  committed,  whatever 
their  frauds,  the  King's  Cabinet  usually  sustained  them;  the 
expansion  of  trade  was  not  to  be  interfered  with. 

A  Royal  letter  informed  Governor  Frontenac  in  1674  that 
"  He  must  treat  Sieur  de  Villeray  with  great  consideration, 
for  ...  he  is  the  man  who  has  devoted  himself  most 
thoroughly  to  trade,  having  vessels  in  trade  with  the  Western 
Islands."  Frontenac  was  ordered  to  restore  him  to  the  office 
of  first  councilor.25  Bitterly  complaining,  as  the  merchants 
did,  when  any  measure  or  law  threatened  to  obstruct  or  lessen 
their  profits,  there  was  no  barrier  to  their  greed  and  avarice, 
and  no  effective  restraint  upon  the  facility  with  which  they 
profited  from  the  debauching  and  swindling  of  the  Indian 
tribes.  "  It  will  be  well,"  read  a  communication  from  the 
King's  Minister  to  De  Costebelle,  in  1699,  "  f°r  tne  people  to 
do  something  in  the  way  of  cultivating  the  soil,  so  as  not  to  be 
at  the  mercy  of  the  merchants."  -6 

Effects  of  Debauching  the  Indians 

While  the  fur  traders  and  merchants  were  reaping  their 
profits,  and  the  King's  Government  in  France  was  finding 
ready  justifications  for  the  indiscriminate  use  of  brandy 

23  Paris  Docs.,  Documents  Relating  to  the  Colonial  History  of  the 
State  of  New  York,  Vol.  IX,  p.  68.  But  when  it  was  urged  from 
Canada  that  a  fixed  price  be  placed  upon  the  beaver,  royal  in- 
structions came  from  Paris,  March  n,  1671,  that  this  would  not  be 
permitted :  — "  Such  a  restriction  would  disgust  the  merchants."  Re- 
port on  Canadian  Archives,  1900  Vol.,  p.  252. 

2*  Report  on  Can.  Archives,  1899  Vol.,  p.  58. 

26 1  bid.,  p.  61. 

2«  Ibid.,  p.  337. 


THE   QUEST  OF  TRADE  13 

among  the  Indians,27  Marquis  de  Demonville  was  writing,  in 
January,  1690,  to  the  Marquis  de  Seignelay,  King's  Minister 
at  Versailles:  ".  .  .  I  have  witnessed  the  evils  caused  by 
that  liquor  [brandy]  among  the  Indians.  It  is  the  horror  of 
horrors.  There  is  no  crime  that  they  do  not  perpetrate  in  their 
excesses.  A  mother  throws  her  child  in  the  fire;  noses  are 
bitten  off;  this  is  a  frequent  occurrence.  It  is  another  Hell 
among  them  during  these  orgies,  which  must  be  seen  to  be 
credited.  .  .  .  Remedies  are  impossible  so  long  as  everyone 
is  permitted  to  sell  and  traffic  in  ardent  spirits.  However 
little  each  at  a  time  may  give,  the  Indians  will  always  get 
drunk.  There  is  no  artifice  that  they  will  not  have  recourse 
to,  to  obtain  the  means  of  intoxication.  Besides,  every  house 
is  a  groggery. 

"Those  who  allege  that  the  Indians  will  remove  to  the 
English,  if  Brandy  be  not  furnished  them,  do  not  state  the 
truth;  for  it  is  a  fact  that  they  do  not  care  about  drinking  as 
long  as  they  do  not  see  Brandy;  and  the  most  reasonable 
would  wish  there  never  had  been  any  such  thing,  for  they  set 
their  entrails  on  fire  and  beggar  themselves  by  giving  their 
peltries  and  clothes  for  drink!  .  .  ."  28 

Beaver  "  A  Mine  of  Gold  " 

Beaver  was  the  accepted  medium  of  exchange  of  the  coun- 
try; there  was  very  little  actual  money  in  circulation,  and 

27  From  yersailles  came  Royal  instructions,  in  1691,  to  the  Bishop 
of  Quebec  in  reply  to  remonstrances   from  merchants  respecting  the 
opposition  of  the  clergy  to  the  trade  in  spirits.    The  Bishop  was  ad- 
vised that  he  must  keep  watch  on  the  clergy,  "  and  prevent  them  from 
disturbing  consciences " ;   that  the  brandy  traffic  gave  France  an  ad- 

' vantage  over  Holland  and  England,  and  that  the  "use  of  brandy  is  in 
itself  very  wholesome." — Ibid.,  pp.  290-291. 

28  Paris  Docs.,  Documents  Relating  to  the  Colonial  History  of  the 
State  of  New  York,  Vol.  IX,  pp.  441-442.    In   fact,   several  Indian 
tribes  and  a  number  of  chiefs  had  earnestly  and  pathetically  implored 
the  French  officials  not  to  allow  liquors  among  them. 


14  THE   QUEST   OF   TRADE 

generally  such  coin  as  was  current  was  avariciously  hoarded 
by  the  officials  and  merchants.  The  deficiency  of  currency 
was  at  times  made  up  by  a  fiat  issue  called  "  card  money." 
"  Beaver,"  wrote  Randot  in  his  Memorial  to  Versailles,  July 
16,  1708,  "  have  always  been  looked  upon  here  as  a  mine  of 
gold  of  which  everyone  wanted  to  take  his  share.  The  settlers 
spent  their  time  hunting  in  the  woods,  preferring  a  life  of 
adventure  in  the  woods,  which  brought  them  large  profits  with 
little  toil,  to  the  cultivation  of  the  land,  which  requires  assidu- 
ous labor."  29 

Such  official  complaints,  though  frequent,  produced  little 
or  no  immediate  change  in  conditions. 

The  vast  quantities  of  beaver  gathered  —  in  1696  there  were 
4,000,000  livres  worth  of  them  —  resulted  in  a  considerable 
lowering  of  prices  of  that  commodity,  which  the  Government 
sought  to  prevent  by  reducing  the  number  of  licenses  and  by 
other  measures.30  Randot  wrote  that  the  trade  of  the  coun- 
try was  carried  on  with  the  sum  of  650,0x30  livres,  which  sum 
was  very  small,  he  said,  for  a  population  of  from  18,000  to 
20,000  souls.  The  prices  of  merchandise  were  very  high,  "  and 
nevertheless  the  people  will  work  only  for  high  wages,  saying 
that  they  wear  out  more  clothes  when  working  than  they  can 
earn  by  their  labor."  The  remedy  for  this  state  of  things,  he 
concluded,  was  to  induce  the  people  to  take  to  the  production 
of  wheat,  cattle,  timber,  fish,  oil  and  ship  building,  by  finding 
them  a  market  for  these  products.  He  further  pointed  out 
the  great  possibilities  in  developing  the  fish  and  oil  trade,  and 
the  coal,  feldspar,  gypsum  and  timber  resources  of  Cape 
Breton.31 

29  Report  on  Canadian  Archives,  1899  Supplement,  p.  227.    "  Memorial 
on  Affairs  in  Canada  at  the  Present  Time  and  the  Settlement  of  Cape 
Breton." 

30  A   Royal  proclamation  of  May  21,   1696,  to   this   effect  repealed 
trading  licenses  and  condemned  offenders  to  the  galleys. 

31  Report  on  Canadian  Archives,  1899  Vol.,  p.  227. 


THE   QUEST   OF   TRADE  15 

The  Ail-Absorbing  Fur  Traffic 

To  a  small  extent,  the  utilization  of  the  rich  timber  resources 
had  already  begun  in  1686  when  the  Quebec  merchants  built 
a  ship  to  carry. boards  to  La  Rochelle,  France,32  and  cattle- 
raising  and  wheat  cultivation  were  carried  on  to  some  slight 
degree.  But  the  prime  and  all-absorbing  traffic  was  the  fur 
trade  dominated  and  dictated  by  the  merchants  in  collusion 
with  royal  officials,  who,  in  order  to  monopolize  it,  frequently 
incited  the  Indians  to  war  with  its  inevitable  train  of  scalpings, 
butcheries  and  other  atrocities.33 

Accompanying  the  sway  of  the  merchant  class  was  that  of 
the  seigneurs  or  feudal  lords,  vested  with  the  ownership  of 
immense  stretches  of  territory  and  with  the  powers,  rights  and 
privileges  of  a  transplanted  feudalism  which,  it  was  sanguinely 
hoped,  could  be  established  artificially,  by  decree,  in  the  new 
country.  f 

32  Ibid.,  p.  278. 

33  .De  Meulles  complained  to  the  King  in  1684  that  Gov.  Perrot,  in 
the  course  of  his  partnership  with  De  Lut  and  some   Quebec  mer- 
chants to  monopolize  all  the  trade  of  the  West,  incited  the  war  with 
the  Iroquois. —  Ibid.,  p.  43.     But  it  appears  that  De  Meulles  himself,  in 
1683,    advised    war    with    the    Iroquois    "who    must   be   humbled    or 
annihilated  in  the  interests  of  trade." — Ibid.,  p.  42. 


CHAPTER  II 
THE  ECCLESIASTICAL  AND  FEUDAL  LORDS 

Aiming  to  reproduce  in  Canada  the  feudal  conditions  pre- 
vailing in  France,  the  Company  of  New  France  and  successive 
governors  lavishly  bestowed  on  favorites  or  Roman  Catholic 
orders  vast  tracts  of  territory,  creating  seigneuries  and  ecclesi- 
astical endowments.  Many  large  grants  of  land  "  fit  for  a 
kingdom  "  were  made  by  the  Company  of  New  France,  but 
some  were  annulled  later  for  non-compliance  with  settlement 
conditions.  The  ecclesiastical  grants,  however,  remained  in- 
tact. 

A  Gift  of  Two  Million  Acres  to  the  Church 

The  total  area  granted  to  the  Roman  Catholic  Church  prior 
to  1763,  and  mostly  in  the  seventeenth  century,  was  2,096,754 
acres. 

Clearly  understanding  that  a  strong  economic  basis  pro- 
vided security  and  wealth,  all  of  the  ecclesiastical  orders  vied 
with  one  another  in  pleading  and  scheming  for  generous  grants 
of  land.  At  a  stroke,  as  it  were,  many  of  the  Roman  Catholic 
orders  were  converted  into  powerful  landlords,  with  immense 
and  positive  economic  resources  guaranteeing  them  temporal 
overlordship  and  progressively  increasing  wealth  for  genera- 
tions. True,  much  of  the  land  was  wilderness,  but  it  was 
rich  in  fur-bearing  animals,  timber,  for  which  the  demand  in 
Europe  was  constantly  increasing,  and  prolific  in  some  other 
potential  resources.  The  wilderness  of  that  time  was  cer- 

16 


THE   ECCLESIASTICAL  AND   FEUDAL   LORDS  I 

tain  to  be  the  agricultural  domain  then  and  of  the  future. 
The  land  grants  to  the  Roman  Catholic  Church  were: 

Acres. 

Quebec  Ursulines 164,615 

Three  River  Ursulines 38,909 

Recollets    945 

Bishop  and  Seminary  of  Quebec 693,324 

Jesuits    891,845 

St.   Sulpicians    250,191 

General  Hospital,  Quebec 73 

General  Hospital,  Montreal 404 

Hotel  Dieu,  Quebec 14,112 

Soeurs  Crises  42,336 


Total    2,096,754 * 

The  importance  of  these  great  land  holdings  became  more 
evident  as  settlement  increased,  and  the  wealth  derived  either 
from  their  forced  sale,  under  subsequent  Government  pressure, 
or  their  retention,  had  a  most  pertinent  and  close  connection 
with  the  later  development  of  modern  capitalism.  Excepting 
the  Jesuits,  whose  estates  were  later  appropriated,  the  time 
came  when  the  Roman  Catholic  clergy  or  orders  were  able 
by  their  ability  in  commanding  money  in  rents,  tithes,  or  by 
borrowing  from  their  communicants  at  absurdly  low  rates  of 
interest,  to  invest  largely,  as  we  shall  see,  in  railroad  and 
steamship  lines  and  industrial  stocks  and  bonds.  The  Seminary 
of  St.  Sulpice,  the  landed  estate  of  which  in  Montreal  is  of 
enormous  present  value,  reaching  tens  of  millions  of  dollars, 
is  now  one  of  the  largest  holders  of  stocks  and  bonds  in 
Canada.  Possessing  vast  wealth,  its  income  is  admittedly 

1  Report  of  Lieut.-Gov.  Milnes  to  the  Duke  of  Portland,  Nov.  I,  1800. 
Canadian  A rchives,—  Series  Q,  Vol.  85,  p.  228. 


1 8  THE   ECCLESIASTICAL  AND   FEUDAL   LORDS 

great,  yet  no  one  not  in  the  inner  circles  can  state  the  precise 
amount;  the  Sulpicians  never,  so  far  as  can  be  learned,  have 
made  a  public  accounting. 

Seminary  of  St.  Sulpice's  Estate 

According  to  Lindsay's  fanciful  story,  the  Seminary  of 
Montreal  or  St.  Sulpice  obtained  a  grant  of  the  Island  of 
Montreal  (on  which  a  city  of  500,000  population  now  stands), 
thus: 

The  Island  had  been  granted  to  Jean  de  Lauson,  Intendant 
of  Dauphine,  on  condition  that  he  should  plant  a  colony  upon 
it,  which  condition  he  neglected.  The  Jesuit  Dauversiere, 
assuring  Lauson  that  he  "  had  a  command  from  Heaven  "  to 
establish  an  hospital  on  the  Island,  tried  to  get  a  cession,  but 
Lauson  had  not  received  a  duplicate  of  this  heavenly  command 
and  demurred  at  giving  away  such  a  finely  situated  property 
for  nothing.  A  second  time  Dauversiere,  accompanied  by  de 
Faucamp  and  P.  Charles  Lallemont,  the  director  of  the  Jesuits, 
interviewed  Lauson,  described  how  the  apparition  of  the 
Holy  Family  had  appeared  to  Dauversiere  in  the  Church  of 
Notre  Dame,  and  how  Jesus  had  put  a  ring  upon  his  finger 
on  which  were  engraved  the  names  of  Jesus,  Mary,  Joseph. 

However,  whatever  the  actual  considerations,  Lauson  was 
induced  to  cede  his  grant  to  the  "  Associates  for  the  Conver- 
sion of  the  Savages  of  New  France"  who  conveyed  it  by 
deed  of  gift  to  the  Seminary  of  St.  Sulpice  of  Paris,  in  1663. 
A  year  after  the  British  conquest,  the  Seminary  of  St.  Sulpice 
of  Paris,  in  1764,  to  escape  probable  confiscation,  assigned  the 
property  to  the  Seminary  of  St.  Sulpice,  in  Montreal.2  Of 
the  subsequent  agitation  against  this  ecclesiastical  holding  — 

2  Lindsay's  Rome  in  Canada  (Edit,  of  1877),  PP-  35i-3$2,  citing 
Faillpn's  Vie  de  Mile.  Mance,  et  Histoire  d'l  Hotel  Dieu  de  Ville- 
Marie  dans  Vile  de  Montreal,  en  Canada. 


THE   ECCLESIASTICAL   AND   FEUDAL   LORDS  19 

how  official  reports  declared  against  the  validity  of  the  title, 
and  how,  nevertheless,  the  Sulpicians  were  empowered  to  re- 
tain it  —  these  facts  will  be  narrated  in  their  appropriate  place 
later  in  this  work. 


Monks  Get  the  Right  of  "  High  Justice  " 

Once  vested  with  the  right  of  ownership  of  the  Island  of 
Montreal,  the  Seminary  of  St.  Sulpice  claimed  the  full  feudal 
property  right  of  administering  "  high  and  low  justice  "  on 
their  domain.  When  in  March,  1693,  an  edict  from  the  King 
appeared,  accepting  the  surrender  of  this  right,  but  granting 
the  Seminary  the  right  of  high  justice  within  the  Seminary's 
enclosure  and  the  farm  of  St.  Gabriel,3  and  also  the  privilege 
of  nominating  the  first  Royal  judge,  the  Seminary  ecclesiastics 
remonstrated  that  they  did  not  intend  to  surrender  that  right 
and  prayed  that  their  holding  of  such  rights  be  expressly  rec- 
ognized.4 Pronson,  Superior  of  the  Seminary  of  St.  Sulpice 
at  Paris,  promptly  proceeded  to  nominate  De  Braussoc  to  be 
Royal  judge  on  the  Island  of  Montreal. 

The  domain  of  the  Seminary  of  St.  Sulpice  was  enlarged, 
on  August  29,  1679,  by  a  grant  of  islands  in  the  vicinity  of 
Montreal,  and  later  by  a  grant  of  the  seignory  of  the  Lake 
of  the  Two  Mountains,  near  Montreal  —  a  property  now  of 
huge  value  and  the  title  of  which  has  been  attacked  in  the 
Quebec  courts.  The  conditions  on  which  the  Sulpicians  were 
given  this  property  were  that  at  their  own  expense  they  should 
build  a  church  and  a  fort  of  stone,  the  King  reserving  the 

3  A  large  stretch  of  land  later  in  the  heart  of  Montreal  that  in  mod- 
ern times  became  of  immense  value. 

4  Report  on  Canadian  Archives,  1899  Vol.,  pp.  74  and  193-194.     At 
times,  the  ecclesiastics  sold  a  small  part  of  their  land,  not  long  after 
their  acquisition  of  it.    Thus,  in  1676,  the  Bishop  of  Quebec  ceded  to 
Sieur  Berthelot  the  Island  of  Orleans  in  exchange  for  Isle  Jesus  and 
25,000  livres.    .Berthelot  had  acquired  Isle  Jesus  from  the  Jesuit  Fathers 
in  1672. —  Ibid.,  p.  69. 


20  THE   ECCLESIASTICAL   AND   FEUDAL   LORDS 

right  to  take  at  pleasure  all  of  the  oak  timber  that  he  wanted 
on  the  grant.5 

Clergy  Place  Themselves  above  Civil  Law 

Professing  to  be  a  law  unto  themselves,  the  clergy  refused 
to  acknowledge  the  supremacy  of  any  secular  tribunal. 

Summoned,  in  1674,  to  appear  in  court,  Abbe  de  Fenelon, 
Abbe  de  Francheville  and  Abbe  Remy  of  the  Seminary  of 
Montreal,  refused  to  take  notice,  on  the  ground  that  their 
priestly  character  protected  them,  and  that  the  secular  laws 
could  not  supplant  the  Holy  Canons,  and  compel  them  to 
give  evidence  against  an  ecclesiastic  in  a  criminal  matter.6 
The  civil  authorities  refused  to  recognize  the  validity  of  this 
plea. 

On  every  possible  occasion  the  ecclesiastics  attempted  to 
assert  their  independence  of  the  civil  power,  and  make  the 
Church  dominant  in  civil  as  well  as  religious  authority  —  a 
move  which  the  King's  Government  contested  with  cunning 
weapons.  On  one  occasion,  May  i,  1677,  the  King's  Minister 
wrote  to  Duchesenau  that  as  he  perceived  "  that  the  Bishop 
was  assuming  an  authority  a  little  too  independent,  it  would 
be  perhaps  well  that  he  should  not  have  a  seat  at  the  [Sover- 
eign] Council.  You  must  seek  every  opportunity,  and  on  all 
occasions  take  every  means  practicable  to  wean  him  from 
the  craving  for  attending  the  Council;  you  must,  however, 
act  in  this  matter  with  great  discretion,  taking  care  that 
what  I  write  be  not  divulged."  7 

The  exactions  and  growing  wealth  of  the  Church  were  de- 
scribed in  a  "  Memorial  on  Canada  and  the  Clergy,"  written 
in  1713  by  De  la  March  to  Pontchartrain,  Secretary  of  State. 

De  la  March  was  a  nephew  of  Boucher,  formerly  Governor 
of  Three  Rivers,  and  had  been  in  the  service  of  the  Seminary 

5  Ibid.,  p.  194.  6  Ibid.,  pp.  62,  65-66.      7  Ibid.,  p.  70. 


THE   ECCLESIASTICAL   AND   FEUDAL   LORDS  21 

of  Quebec  for  nearly  ten  years.  He  described  in  detail  the 
riches  and  great  revenue  of  that  institution,  accruing  from  its 
seignories,  farms,  mills,  houses,  lands,  cattle  and  vessels,  and 
how  it  owned  all  the  shore  of  the  river  from  Montmorency 
as  far  as  La  Baie  St.  Paul,  as  well  as  the  Isle  of  Condre  and 
that  of  Jesus.  "  They  could  do  a  great  deal  of  good,  but  stop 
at  no  acts  of  injustice  in  striving  to  promote  their  own  inter- 
ests. They  keep  in  great  part  for  themselves  the  allowance 
His  Majesty  grants  for  the  poorer  cures  and  missionaries, 
and  which  is  entrusted  to  them  for  distribution,"  etc.,  etc.8 
It  was  of  the  Roman  Catholic  College  of  Quebec  that  De 
Beauharnais  reported  later  from  Quebec  to  Maurepas  that, 
"  It  is  publicly  stated  by  everybody  in  this  country  that  the 
College  of  Quebec  has  been  built  out  of  the  frauds  committed 
in  the  [fur]  trade  with  the  English."  9 

But  lands  and  chattels  were  by  no  means  the  only  source  of 
wealth  of  the  ecclesiastics.  By  a  system  of  tithes  every  farmer 
was  taxed  on  his  produce,  supplying  a  regular  and  never-fail- 
ing income  to  the  priests.  An  ordinance  decreed  in  1667  had 
promulgated  a  schedule  of  the  amounts  in  tithes  to  be  levied 
for  the  support  of  the^  clergy.  Not  satisfied  with  this  legal 
rate  of  tithes,  the  clergy  constantly  sought  to  amplify  their 
exactions. 

System  of  Tithes 

The  Cures  of  Beauport  and  of  1'Ange  Gardieu  exacted  tithes 
not  only  of  grains,  but  of  all  products  of  the  soil,  whether  the 
land  was  under  cultivation  or  not,  and  tithes  on  cattle,  hay, 
fruits,  flax,  hemp,  sheep  and  other  possessions.  "  The  result 
has  been,"  the  Sovereign  Council  declared,  in  1705,  "  loud 
murmurs  from  the  people  when  leaving  the  Church."  Pro- 

8/&*W.,  p.  197. 

9  Paris  Docs.,  Documents  Relating  to  the  Colonial  History  of  the 
State  of  New  York,  Vol.  IX,  p.  1071. 


22  THE    ECCLESIASTICAL   AND    FEUDAL    LORDS 

hibiting  the  cures  from  contravening  the  tithe  ordinance,  it 
ordered  them  to  explain  their  conduct.  Their  defense  was 
that  they  were  "  reduced  to  living  in  a  state  of  poverty  which 
exposes  them  to  the  contempt  of  the  people."  The  protesting 
farmers  replied  that  "  they  are  able  to  live  in  comfort  and 
afford  themselves  the  luxury  of  a  barrel  of  wine  every  year."  10 
The  Royal  decision  was  adverse  to  the  priests. 

In  urging  upon  the  King,  in  1730,  measures  to  enforce 
regularity  on  the  part  of  the  ecclesiastics  in  Quebec,  Beau- 
harnais  and  Hocquart  wrote  that  their  effect  will  be  "  that 
there  will  be  found  no  longer  in  Quebec  so  many  useless 
ecclesiastics,  who,  for  want  of  employment,  are  beginning  to 
engage  in  worldly  amusement,  play,  feasting  and  dissipation. 
The  effect  of  their  idle  life  is  that  they  think  nothing  of  quar- 
relling amongst  themselves  and  creating  discord  amongst 
themselves."  X1 

Five  years  later  there  was  another  uproar  when,  not 
content  with  the  tithe  of  the  26th  bushel  on  wheat  and 
other  grains,  the  Bishop  of  Quebec,  in  1735,  sought  to  exact 
the  1 3th  bushel  not  only  upon  grain,  but  upon  all  vegetables, 
hemp,  flax,  tobacco,  and  other  products.  Upon  being  offi- 
cially informed  that  "  the  farmers  would  not  willingly  submit 
to  such  an  increase,"  he  wisely  decided  not  to  change  the 
schedules  of  exaction  already  long  in  force.12 

Here,  then,  was  the  complete  ecclesiastical  mechanism  for 
extorting  a  great  part  of  the  produce  of  labor.  Some  of  the 
priests  were  sincerely  intent  upon  missionary  work,  but  there 
was  much  complaint  that  extortion  was  common.  Setting 
themselves  up  as  a  privileged  class,  the  ecclesiastics  claimed 
distinct  exemptions  and  immunities.  Dire,  however,  was  the 
punishment  inflicted  upon  the  man  or  woman  of  "  the  lower 

10  Report  on  Canadian  Archives,  1900  Vol.,  p.  198. 
id.,  1887  Vol.,  p.  ccxxvi. 
id.,  1900  Vol.,  p.  198. 


THE   ECCLESIASTICAL   AND   FEUDAL   LORDS  23 

orders  "  committing  the  slightest  infraction  of  the  rule  of  the 
Church  or  its  regulations  translated  into  civil  laws. 

For  blasphemy  a  mild  punishment  was  a  heavy  fine,  or  im- 
prisonment on  bread  and  water.  A  Montreal  ordinance  of 
1676  forbade  the  blasphemy  of  "  the  holy  name  of  God  or  to 
utter  anything  against  the  Blessed  Virgin  under  pain  of  cor- 
poral punishment,  and  in  case  of  a  fourth  offense  to  have  the 
tongue  cut  off."  13 

The  area  of  2,096,754  acres  granted  to  the  Roman  Catholic 
Church,  and  constituting  nearly  one-fourth  of  the  total  area 
granted,  was  held  by  a  mere  handful  of  ecclesiastics.  In  1720, 
long  after  most  of  these  grants  had  been  made,  and  when  the 
population  of  Canada  was  said  to  be  24,434,  there  were  but 
24  Jesuits,  32  Recollets,  67  Parish  priests  and  missionaries, 
175  nuns,  and  also  31  priests  in  what  were  called  foreign  mis- 
sions. Jesuits  quarrelled  with  Sulpicians,  and  they  with  other 
orders,  but  all  upheld  the  power  of  the  Church,  and  leagued 
to  prevent  any  interference  with  its  theological  and  expanding 
economic  hold. 

Seigneurs  Get  More  Than  7,000,000  Acres 

Of  the  7,985,470  acres,  however,  granted  previous  to  the 
British  conquest,  in  1763,  the  Catholic  Church's  share,  large 
as  it  was  —  nearly  one-fourth  —  was  not  nearly  as  large  as 
that  granted  mainly  to  the  seigneurs,  or  feudal  landlords.  A 
total  of  5,888,716  acres,  according  to  Lieutenant-Governor 
Milnes,  was  granted  to  the  laity,1*  comprising  less  than  400 
seigneurs. 

Either  Milnes'  estimate  was  a  moderate  one,  or  the  grants 

13  Montreal  Archives,   Sessional   Paper,   No.  6,  Vol.  25,   Que.  Sess. 
Papers,  1891. 

14  Report  of  Lieut.-Gov.  Milnes  to  the  Duke  of  Portland,  Nov.   I, 
1800,    (Canadian  Archives,  Series  Q,  Vol.  85,  p.  228;)    Rep.  on  Can. 
Archives,  1892  Vol.,  p.  14. 


24  THE   ECCLESIASTICAL   AND   FEUDAL   LORDS 

to  the  seigneurs  were  later  irregularly  extended.  Reporting 
to  the  House  of  Assembly  in  1845,  tne  Commissioner  of  the 
Crown  Lands  and  the  Surveyor  General  stated  that  the  lands 
surveyed  in  seignories  in  Lower  Canada  amounted  to  9,027,880 
acres,  and  that  the  lands  granted  to  individuals  in  fief  and 
seignory  by  the  Crown  of  France  amounted  to  7,496,000 
acres,15  of  which  about  4,300,000  acres  were  gradually  "  con- 
ceded "  to  tenants. 

Up  to  the  year  1763  the  old  Company  of  New  France  or 
the  various  governors  had  created  376  seignories.  This  proc- 
ess of  creation  went  somewhat  slowly  until  the  years  1671 
and  1672.  Having  attended  to  his  own  desires  by  contriving 
to  have  the  Des  Islets  seignory  granted  to  himself,  and  erected 
by  the  King  into  a  barony,18  Intendant  Talon  was  in  a  proper 
mood  to  begin  the  grand  distribution  of  seignories. 

In  the  single  year  of  1672  Intendant  Talon  industriously 
donated  numerous  seignorial  grants,  giving  away  immense 
estates,  with  full  hereditary  feudal  rights,  to  favored  indi- 
viduals, some  of  whom  were  military  officers. 

De  Martignon  and  Pettier  Grants 

On  October  17,  1672,  Talon  granted  to  De  Martignon  a 
tract  six  leagues17  in  front  on  the  River  St.  John  and  the 
same  area  in  depth.  Martignon  was  vested  with  the  right  of 
holding  the  land  in  fief,  with  all  the  rights  of  jurisdiction  and 
seignory  assured  to  himself,  his  heirs  and  assigns.  The  grant 
was  made  on  condition  of  homage;  he  was  required  to  pre- 
serve all  of  the  oak  timber  on  that  part  of  his  land  which  he 

15  Journals  of  the  Legislative  Assembly  of  the  Province  of  Canada, 
1849,  Appendix  B.,  Vol.  Ill,  p.  7.     In  his  report  to  Lord  Durham  in 
1838,  Commissioner  Buller's  estimate  of  seignorial  estates  subject  to 
obligation  to  "  concede  "  lands  to  tenants  was  8,300,000  acres,  and  of 
this  area  about  4,300,000  acres  had  been  "  conceded." 

16  Report  on  Canadian  Archives,  1899  Vol.,  p.  252. 

17  A  league  equalled  about  4,428  acres. 


THE   ECCLESIASTICAL   AND   FEUDAL   LORDS  2$ 

should  set  apart  for  his  principal  manor  house;  in  making 
grants  to  his  tenants  he  was  to  reserve  all  oak  timber  fit  for 
ship-building;  and  if  mines  were  discovered,  he  was  to  give 
immediate  notice  to  the  King  or  the  Royal  West  India  Com- 
pany. This  extensive  domain  was  considerately  granted  for 
no  other  reason  than  that  Martignon  was  a  creditor  of  the 
estate  of  the  deceased  Latour,  his  father-in-law,  who  had 
owned  more  than  50  leagues  of  land  fronting  the  River  St. 
John,  which  seignory  was  in  danger  of  forfeiture  to  the 
King  for  non-settlement  and  non-cultivation.  Talon's  op- 
portune grant  preserved  much  of  this  from  threatened  for- 
feiture.18 

On  the  next  day,  October  18,  1672,  Intendant  Talon  pre- 
sented to  Jacques  Pettier,  Sieur  de  St.  Denis,  two  leagues  in 
fief  and  seignory  "  with  all  of  the  hereditary  rights  of  mean 
and  inferior  jurisdiction."  This  grant  was  given  upon  the 
usual  conditions  of  homage  and  the  reserving  of  oak,  and  on 
the  condition  of  cultivation,  attending  to  the  fisheries  and  pro- 
moting colonization.19  To  Sieur  Dupuy,  Talon  gave  a  grant 
of  Heron  Island  and  all  adjacent  islands  in  the  St.  Lawrence 
River,  with  the  right  of  fishing;  he  was  to  hold  it  in  fief,  sub- 
ject to  the  duty  of  paying  fealty  and  homage.20 

More  Generous  Land  Grants 

October  20,  1672,  found  the  high  and  mighty  Intendant 
Talon  in  an  extremely  gracious  mood ;  on  that  day  he  made  a 
gift  to  De  Marson,  commandant  on  the  St.  John  "  in  consid- 
eration of  military  services,"  of  a  tract  of  land  four  leagues 
in  front  and  one  league  deep  on  the  east  side  of  the  St.  John 
River,  and  to  De  Marson's  brother-in-law,  Joihert,  he  gave  an 

18  Titles  and  Documents  Relating  to  the  Seignorial  Tenure  in  return 
to  an  address  of  the  Legislative  Assembly,  1851,  Qiuebec,  pp.  5-6. 
wlbid.,  pp.  7-8. 
**Ibid.,  pp.  8-9. 


26  THE   ECCLESIASTICAL   AND   FEUDAL   LORDS 

adjoining  tract  of  a  league  square.  Both  of  these  benefici- 
aries were  vested  with  hereditary  feudal  jurisdiction.21 

But  on  October  29  following,  Talon  was  even  more  ex- 
pansively kind;  on  that  day  he  created  ten  more  seignories. 
To  the  eager  Governor  Perrot  of  Montreal, —  the  same  who 
at  that  very  time  was  deriving  large  profits  from  his  fraud- 
ulent fur  trade  with  the  Indians  —  Talon  gave  "  for  serv- 
ices "  a  whole  cluster  of  valuable  islands  with  all  of  the 
rights  of  seignory  and  jurisdiction.22  A  gift  of  an  hereditary 
fief  and  seignory  of  two  leagues  in  front  by  one  league  in 
depth  on  the  St.  Lawrence  River  was  made  by  Talon  to  Sieu 
de  la  Boutellerie.23 

Talon  must  have  stood  extremely  high  in  the  estimation  of 
the  officers  of  the  Carignan  regiment  (a  valuable  hold  at  a 
time  when  force  swayed  everything)  after  that  day's  arduous 
work  of  signing  deeds.  To  Contrecour,  a  captain  in  that  regi- 
ment, he  gave  "  for  military  services  "  an  hereditary  fief  of 
two  square  leagues  on  the  St.  Lawrence;  to  another  captain 
in  the  same  regiment  he  granted  a  similar  large  tract;  to  the 
widow  of  still  another  captain  in  that  regiment  he  gave  a 
large  seignorial  estate  on  the  same  river;  to  three  other  of- 
ficers estates  of  large  dimensions ;  and  to  De  Chambly,  another 
captain  in  the  Carignan  regiment,  a  splendid  seignorial  domain 
of  six  leagues  in  front  by  one  league  in  depth  on  the  St.  Louis 
River.  All  of  these  and  other  estates  granted  carried  with 
them  full  feudal  rights.24 

Further  Creation  of  Seignorial  Lords 

Officials  of  all  varieties,  as  well  as  military  officers  and  mer- 
chants, hastened  to  be  transformed  into  seignorial  lords.  Not- 

Zllbid.,  pp.  o-io.  22  Ibid,  pp.  11-12.  23  Ibid.,  pp.  13-14. 

z*Ibid.,  pp.  14-25.  These  rights,  however,  did  not  include  titles  of 
nobility  which,  under  ancient  feudalism  in  Europe,  accompanied  owner- 
ship of  the  land. 


-      THE  ECCLESIASTICAL  AND   FEUDAL  LORDS  27 

withstanding  the  King's  instructions  in  1672  to  make  no  more 
grants  until  those  already  granted  should  have  been  better 
settled,  Governor  Frontenac,  May  6,  1675,  gave  to  De  Peyras, 
a  councillor  in  the  Sovereign  Council,  an  extensive  grant  front- 
ing two  leagues  and  the  same  in  depth  on  the  St.  Lawrence 
River,  together  with  three  islands.23  On  the  same  day  he 
handed  over  to  Charles  Denis  de  Vitre  the  deed  for  a  seignory 
of  the  same  dimensions  on  the  St.  Lawrence,  measured  from 
the  Metis  River.26  On  May  n,  1687,  a  tract  of  two  leagues 
frontage  was  given  to  Cardonniere  and  D'Artigny. 

March  16,  1691,  was  a  notable  date  in  the  chronicles  of 
seignories.  On  that  happy  day  a  number  of  vast  seignories 
were  created.  Gobin,  a  Quebec  merchant,  was  thrown  into 
felicity  by  the  present  of  a  grant  of  land  twelve  leagues  by 
ten  leagues  at  the  Baie  des  Chaleurs.  De  Fronsac's  prize  was 
even  greater;  the  gift  to  him  was  an  immense  seignorial  fief 
of  fifteen  leagues  frontage  by  fifteen  leagues  in  depth  at  Miri- 
machi.  De  Bellefours,  a  Quebec  notary,  was  transformed  into 
a  seignorial  lord  by  the  grant  of  a  fief  on  the  St.  John  River. 
To  D'Iberville  was  given  a  seignorial  estate  of  twelve  leagues 
by  ten  leagues  bordering  upon  the  Baie  des  Chaleurs.27 
Another  batch  of  seignorial  estates  were  given  on  May  i$th 
following.28  Certain  definite  hereditary  feudal  rights  accom- 
panied these  estates,  too. 

The  Marquis  de  Vaudreuil,  Governor  of  Montreal,  did  not 
suffer  himself  to  be  omitted;  his  turn  came  when,  in  1702,  he 
was  presented  with  a  large  seignorial  estate  at  Cascades 

25  Report  on  Canadian  Archives.  1899  Vol.,  p.  67. 

26  Ibid. 

27  Report  on  Canadian  Archives,  1899  Vol.,  p.  289.    But  there  were 
even  larger  seignorial  estates.     A  Royal  memorial  of  June  14,  1695,  com- 
plained,   for   instance,   of   the    Sieurs   D'Amours,   etc.,    who,   although 
"owning  30  leagues  of  rich  land  in  a  most  favorable  climate"  on  the 
St.  John  River,  had  done  nothing  to  improve  their  grants  but  had  de- 
voted themselves  to  trading  with  the  Indians. —  Ibid.,  p.  310. 

28  Ibid.,  p.  316. 


28  THE   ECCLESIASTICAL  AND   FEUDAL    LORDS 

Rapids.29  These  are  some  instances  of  the  earlier  grants. 
After  this,  most  of  the  seignorial  estates  granted  were  in 
Labrador,  and  those  given  after  1731  were  mostly  in  Lake 
Champlain  or  on  the  Detroit  River.  Some  of  the  seignorial 
grants  were  so  extensive  that  Jacques  Hyacinthe  Simon  de 
Lorme  (after  whom  the  city  of  St.  Hyacinthe,  Quebec,  is 
named)  a  contractor  for  military  supplies  for  the  French 
army,  bought  a  tract  of  108  miles,  constituting  the  estate  of  de 
Rigaud,  later  seigneur  of  Vaudreuil. 

Feudal  Tributes  and  Servitudes  Established 

As  soon  as  they  were  possessed  of  the  seignories,  the  seign- 
eurs (contrary  in  many  cases,  to  the  "  Custom  of  Paris  " — 
as  the  French  law  which  had  been  introduced  into  Canada 
was  called — )  established  feudal  exactions  and  servitudes  of 
the  most  onerous  nature. 

A  few  sparse  acres  were  granted  to  the  tenant;  to  this 
day  the  small  rectangular  plots  into  which  the  seigneurs 
divided  their  farming  lands  for  "  concession  "  to  tenants  may 
still  be  seen  —  miles  upon  miles  of  these  diminutive  peasant 
farms.  The  seigneurs  demanded  corvee  or  forced  statute 
labor.  They  exacted  a  ground  rent  for  the  use  of  the  common 
used  as  pasture  ground.  To  themselves  they  reserved  the 
privilege  of  recovering  possession  of  lands  granted  by  them, 
whenever  they  had  been  sold,  on  refunding  to  the  purchaser 
the  amount  of  the  purchase  money.  The  seigneurs  further 
reserved  the  right  of  taking  from  the  lands  sold  by  them  all 
of  the  wood  they  wanted.  They  arrogated  to  themselves  the 
preference  in  buying  whatever  produce  the  farmers  had  for 

29  Ibid.,  p.  233.  Vaudreuil,  it  appears,  carried  on  a  large  fur  trade 
with  the  Iroquois  Indians;  his  annual  trade,  it  was  reported,  reached 
i, ocx)  peltries  —  M.  de  Clerambault  to  Ponchartrain,  April  27,  1709,  Paris 
Docs.,  Documents  Relating  to  the  Colonial  History  of  the  State  of 
New  York,  Vol.  IX,  p.  823. 


THE  ECCLESIASTICAL  AND   FEUDAL  LORDS  2Q 

sale.  They  reserved  as  their  own  property  all  the  pine 
and  oak  trees  on  all  land  whether  held  or  sold  by  them.  They 
extorted  the  eleventh  part  of  the  fish  caught  in  the  waters 
adjacent  to  or  in  their  lands.  The  tenants  were  forced  to  use 
the  seigneur's  grist  mill;  to  bake  their  bread  in  his  oven, 
and  were  required  to  perform  many  other  duties  and  servi- 
tudes and  to  pay  still  other  plebeian  tributes,  at  the  arbitrary 
will  of  the  seigneur.30 

Importing  Peasantry  and  Proletariat 

Three-fourths  of  the  colonists  settled  on  the  seignories  had 
been  soldiers.31  But  steps  had  early  been  taken  by  the  French 
Government  to  ensure  a  proletariat. 

A  decree  issued  in  Paris,  April  3  and  12,  1669,  had,  as  a 
means  of  stimulating  large  families,  ordered  a  pension  of  300 
livres  a  year  to  all  inhabitants  of  Canada  "  not  being  priest, 
monks  or  nuns  "  having  as  many  as  10  lawful  children,  and 
directed  a  pension  of  400  livres  a  year  to  be  paid  to  those 
having  12  children.32  A  state  fund  was  later  established  for 
the  promotion  of  marriages.  In  1671  the  King  gave  orders 
to  ship  to  Canada  thirty  bachelors,  20  to  30  years  of  age,  and 
as  many  girls  of  the  corresponding  age.33  In  1671  another 
Royal  decree  ordered  the  shipment  of  "  100  recruits,  150  young 
women  and  some  cattle."  34  "  His  Majesty,"  wrote  the  Min- 
ister from  Versailles  in  announcing  the  fact  to  Talon,  "  has 
heard  with  pleasure  that  of  the  165  girls  sent  to  Canada  last 
year  only  15  remained  unmarried."  Talon  was  commended 
for  having  ordered  that  the  volunteers  should  be  deprived  of 

30  Report  on  Canadian  Archives,  1899  Vol.,  pp.  122-123. 

31  Randot's  Memorial  on  Affairs  in  Canada  at  the  Present  Time  [1707] 
and  the  Settlement  of  Cape  Breton,  Ibid.,  p.  228. 

32  Report  on  Canadian  Archives,  1887  Vol.,  p.  ccxxxvii. 

33  Ibid.,  1899  Vol.,  p.  57. 
3*Ibid.,  p.  251. 


30  THE   ECCLESIASTICAL  AND   FEUDAL   LORDS 

the  privilege  of  trading  and  hunting  if  not  married  within 
two  weeks  after  the  arrival  of  the  girls. 

Orders  had  been  given  that  the  girls  sent  to  Canada  "  shall 
be  strong  and  healthy,  and  in  every  way  suitable."  35  This 
assurance  had  reference  to  a  complaint  made  to  the  Arch- 
bishop of  Rouen  that  a  batch  of  girls  taken  from  the  General 
Hospital  there  and  shipped  off  to  Canada  in  1669  " were 
found  not  to  be  strong  enough  for  the  work  of  farming."  s6 
The  Archbishop  was  called  upon  to  induce  the  priests  to  find 
about  60  village  maids  who  would  consent  to  go  to  Canada.37 
In  1671  a  hundred  hired  men  were  shipped  over.38  Most  of 
the  skilled  workers  were  carpenters,  ship  builders,  farmers, 
shoe  makers,  iron  workers  and  of  some  other  trades.39  But 
the  cost  of  commodities  in  Canada  was  so  high  that  skilled 
workmen  could  not  be  induced,  without  difficulty,  to  leave 
France  unless  assured  higher  wages  and  the  liberty  of  return- 
ing; instructions  came  from  Versailles,  in  1687,  that  these 
conditions  should  be  granted.40 

Such  were  some  of  the  measures  to  secure  a  native  white 
working  class,  which  was  supplemented  by  Negro  and  also 
Indian 41  slaves.  From  the  outset  the  workers  and  peasants 
found  themselves  under  the  domination  of  the  Church,  the 
feudal  seigneurs  and  the  merchants.  All  three  exacted  their 
tribute  relentlessly:  the  Church,  its  elaborate  system  of  tithes 
and  other  exactions ;  the  merchants  both  in  Canada  and  abroad, 

35  Ibid. 
™Ibid.,  p.  249. 

37  Report  on  Canadian  Archives,  1899  Vol.,  p.  249. 

38  Ibid.,  p.  252. 

39  Report  on  Work  of  the  Archives  Branch,  Dom.  Arch.  1910,  p.  63, 
etc. 

40  Report  on  Canadian  Archives,  1899  Vol.,  p.  279. 

41  The  right  to  hold  Indians  in  slavery,  and  to  sell  them  was  decided 
by  Judge  Hocquart,  May  29,  1733,  in  the  case  of  an  Indian  belonging 
to  Decouverte,  and  hired  by  him  to  Radisson.    Judge  Hocquart  de- 
cided that  this  right  existed  by  virtue  of  an  ordinance  of  April  13,  1709. 
—  Rep.  on  Can.  Archives,  1899  Vol.,  p.  142. 


THE   ECCLESIASTICAL  AND   FEUDAL   LORDS  3! 

their  schedule  of  usurious  prices,  often  for  worthless  goods ; 42 
and  the  seigneurs  -their  crushing  multiple  of  feudal  dues  and 
servilities. 

Seigneurs  Seek  Titles  of  Nobility 

Having  assured  proprietorship  of  vast  areas  of  land,  the 
seigneurs  sought  hard  to  get  titles  of  nobility.  They  wanted 
the  hereditary  name  as  well  as  the  substance  of  an  established 
aristocracy,  consistent  with  the  traditions  of  ancient  feudal- 
ism. 

A  patent  of  nobility  was  granted  to  Dupont  de  la  Nouvelle 
in  1669;  Talon  received  the  title  of  Count  to  his  farm  of 
d'Orsainville ;  Berthelot,  LeMoyne  and  others  were  vested 
with  titles, —  Le  Moyne  as  Baron  Longueuil,  named  after 
his  seignory ;  but  the  greater  number  of  seigneurs  petitioned  in 
vain  for  titles  of  nobility,  although  a  decree  of  the  Council 
of  State,  in  1684,  forbade  any  inhabitant  of  Canada,  other  than 
gentlemen,  to  assume  the  title  of  Esquire,  under  a  penalty  of 
a  fine  of  500  livres.43  The  King  sent  word,  in  1686,  that  he 
did  not  approve  of  the  proposal  to  give  new  titles  of  nobility 
in  Canada ;  "  there  are  already  too  many." 44  A  Royal 
memorial  from  Versailles,  March  30,  1687,  declared  that, 
"  The  poverty  of  certain  noble  families  [in  Canada]  is  partly 
the  result  of  their  wanting  to  live  like  people  of  rank,  without 
working.  I  am  convinced  that  letters  of  nobility  must  never 
be  granted  to  any  residents  of  Canada."  45 

But  this  opposition  was  not,  it  is  needless  to  say,  intended 

42  Thus,  June  30,  1707,  an  order  from  Versailles  forbad  Gitton,  a 
merchant  of  La  Rochelle,  to  trade  in  Canada  "  in  order  to  punish  him 
for   sending  worthless  goods  to  the   Colony." — Report   on  Canadian 
Archives,  1899  Vol.,  p.  203. 

43  Report  on  Canadian  Archives,  1899  Vol.,  p.  80. 
«/Wrf.,  p.  83. 

45  Ibid.,  p.  277.  This  seems  to  have  been  an  irritating  subject.  Two 
years  previously  the  King's  Minister  wrote  to  De  Meulles  that  _  he 
"  must  curb  the  audacity  of  those  assuming  the  status  of  nobility  with- 
out being  entitled  to  it." — Ibid.,  p.  270. 


32  THE   ECCLESIASTICAL  AND   FEUDAL   LORDS 

to  introduce  a  more  democratic  air;  it  was  intended  solely  to 
promote  the  development  of  resources  and  trade  by  prevent- 
ing too  formidable  and  exclusive  an  idle  class.  Already  classes 
in  Canada  were  rigidly  fixed  in  law ;  in  the  "  great  meetings  " 
the  population  was  divided  into  four  classes.  First  came  the 
clergy,  then  the  nobility,  after  them  the  judiciary,  and  finally 
the  commonalty.46  The  King's  Minister,  in  1673,  informed 
Governor  Frontenac  that  he  must  never  establish  the  Estates 
General  for  the  inhabitants  of  the  country  or  a  body,  and  that 
"  the  syndicate  of  the  settlers  must  also  be  quietly  sup- 
pressed." 47 

Seigneurs'  Authority  to  Punish 

Although  holding  the  exclusive  rights  of  trading  with  the 
Indians,  and  also  of  hunting  and  fishing,  some  of  the  seign- 
eurs looked  down  loftily  upon  trade  with  aristocratic  con- 
tempt. The  extortions  of  the  seigneurs  increased  with  the 
comparative  prodigality  of  their  expenditures,  and  varied  ac- 
cording to  personal  disposition  and  extent  of  rapacity. 

The  seigneur's  right  of  high  jurisdiction  (haute  justice) 
gave  him  power  to  deal  with  all  criminal  cases,  including 
those  punishable  by  death,  mutilation  or  other  such  extreme 
corporal  penalty.  Only  such  crimes  as  treason,  counterfeit- 
ing, and  the  like,  as  were  considered  perpetrated  against  the 
royal  person  or  property,  were  excepted  from  the  seigneur's 
jurisdiction.  In  civil  cases  the  authority  of  the  seigneur  gave 
him  power  to  fine  or  imprison,  to  award  damages  and  to  pass 
other  penal  judgments.  He  could  banish  obnoxious  persons 
from  his  seignory,  put  them  in  stocks  and  brand  them;  and 
in  the  case  of  offenses  legally  entailing  confiscation  of  prop- 
erty, real  or  personal,  he  had  the  right  to  appropriate  it,  ex- 
cepting in  the  case  of  offenses  committed  against  the  Crown.48 

46  Report  on  Canadian  Archives,  1899  Vol.,  p.  59. 

*  Ibid. 

48Munro's   The  Seignorial  System  in  Canada,  pp.   148-149.    "This 


THE  ECCLESIASTICAL  AND   FEUDAL   LORDS  33 

Outside  the  chateau  the  seigneur  had  his  hall- for  the  try- 
ing and  sentencing  of  his  accused  vassals,  and  he  had  his  prison 
on  the  ground  floor.  For  even  trivial  offenses,  according 
to  the  answers  given  later  by  De  Lanaudiere  to  the  Committee 
of  the  Council,  these  were  the  long-prevailing  customary  pun- 
ishments :  —  "  Expressions  of  resentment,  contradiction,  in- 
gratitude and  scandal,  be  it  by  the  vassal  or  sub  feudatory,  are 
severely  punished  by  the  laws.  Besides  a  confiscation  of  their 
lands,  there  are  examples  of  being  obliged  to  appear  in  court 
during  its  sitting,  bareheaded,  kneeling,  fettered,  asking  pardon 
of  their  offended  seigneurs;  even  imprisonment,  put  to  the 
galleys,  and  other  unheard-of  punishments,  at  the  mercy  of  the 
judge.  .  .  ."49 

Squeezing  of  the  Vassals 

Judge  Randot,  Sr.,  writing  November  16,  1707,  to  the  French 
Government,  at  Paris,  on  the  administration  of  justice  in 
Canada,  complained  of  the  spirit  of  "  chicane  and  cunning/' 
and  described  how  the  poor  inhabitants  were  daily  obliged  to 
leave  the  cultivation  of  their  lands  in  order  to  defend  unjust 
law  suits.  "Many  inhabitants  have  worked  on  the  word  of 
the  seigneurs,  others  on  simple  tickets  which  did  not  express 
the  charges  of  the  grant.  Hence  a  great  abuse  has  arisen, 
which  is,  that  the  inhabitants  who  had  worked  without  a  safe 
title  have  been  subjected  to  very  heavy  rents  and  dues,  the 
seigneurs  refusing  to  grant  them  deeds  except  on  these  condi- 
tions which  they  were  obliged  to  accept,  because  otherwise 
they  would  have  lost  their  labor  .  .  ."  The  seigneurs  de- 
manded cash  payments,  which  the  inhabitants  "  find  very  in- 
convenient, as  they  frequently  have  none,  for  although  30 
sous  appear  but  a  trifle,  it  is  a  great  deal  in  this  country  where 

rule,"  says  Munro,  "  was  in  full  accord  with  the  feudal  maxim  that  '  he 
who  condemns  the  person  confiscates  the  property.'" 

4QSeignorial  Tenure,  Titles  and  Documents,  etc.,  Legislative  As- 
sembly, Quebec,  1851,  pp.  37~39. 


34  THE  ECCLESIASTICAL  AND   FEUDAL   LORDS 

money  is  scarce."  Judge  Randot  enumerated  a  long  list  of 
other  abuses.50 

The  cash  payments  for  rent  of  lands  granted  was  the  direct 
form  of  taxation  exacted  by  the  seigneurs.  The  indirect  form 
comprised  the  obligation  of  maintaining  the  necessary  roads 
by  compulsory  labor;  the  tenant  had  to  yield  to  the  seigneur 
a  pound  of  flour  on  every  fourteen  pounds  ground  in  the  mill, 
of  which  the  seigneur  had  the  exclusive  ownership  and  the 
monopoly.  In  a  number  of  other  ways  the  tenant  was  merci- 
lessly compelled  to  pay  tribute  in  the  form  of  produce,  taxes 
and  fines. 

If  the  tenant  or  inhabitant  failed  or  refused  to  fulfill  even 
the  slightest  of  these  crushing  exactions,  the  seigneur  at  once 
sat,  as  a  judge,  inexorably  upon  him.  Exercising  certain 
sovereign  powers  within  the  limits  of  their  seignories,  and 
holding  the  power  of  high,  low  and  middle  jurisdiction,  the 
seigneurs,  as  we  have  seen,  could  hold  courts  of  justice,  could 
confiscate  or  forfeit  property  and  possess  themselves  of  it,  and 
had  the  right  to  all  escheated  property.  Even  the  act  of 
doing  these  self-beneficial  things  was  another  profitable  source, 
since  the  holding  of  courts  of  justice  yielded  the  seigneurs 
certain  emoluments.51 

Judge  Randot  urged  in  1707  that  statute  labor  was  a  cause 
of  trouble  —  in  fact,  it  had  occasioned  a  riot  of  workers  in 
Montreal  —  and  suggested  other  reforms.  Ten  years  later  a 
Royal  decree  was  issued  declaring  void  many  of  the  seignorial 
exactions  and  servitudes,52  but  certain  odious  feudal  features 
remained  in  force  until  after  the  middle  of  the  nineteenth 
century,  causing  a  series  of  popular  ferments  and  agitations, 

50  Ibid.,  pp.  lo-n.    Italics  in  the  original. 

51  Ibid.,  p.  47.     Also,  Report  of  the  Commissioners  Appointed  to  In- 
quire Into  the  State  of  the  Laws  and  other  Circumstances  Connected 
ivith  the  Seignorial  Tenure,  etc.,  Laid  before  the  Legislative  Assem- 
bly, Quebec,  October,  1843. 

52  Report  on  Canadian  Archives,  1899  Vol.,  p.  122. 


THE   ECCLESIASTICAL  AND   FEUDAL   LORDS  35 

finally,  when  settlement  was  made  after  1867,  costing  the 
public  treasury,  directly  and  indirectly,  at  least  $10,000,000  to 
get  rid  o.f  them. 

Condition  of  the  Peasants  and  Artisans 

While  ecclesiastics,  seigneurs,  officials  and  merchants  were 
living  in  such  various  degrees  of  elegance  as  were  possible  in 
a  newly-settled  country,  and  exercising  a  differing  sway  of 
power,  the  lot  of  the  working  class  and  its  social  state  were 
manifestly  of  the  lowliest. 

The  peasant  houses  in  the  rural  districts  generally  consisted 
of  only  a  single  room,  lighted  by  three  windows;  in  this  one 
room  the  whole  family  ate,  lived  and  slept. 

During  the  long  winters,  the  rural  workers  hewed  timber, 
sawed  planks  or  split  shingles.  "  A  poor  man,"  wrote  Mother 
Mary,  "  will  have  eight  children  or  more,  who  run  about  in 
winter  with  bare  heads  and  bare  feet  and  a  little  jacket  on  their 
backs,  live  on  nothing  but  bread  and  eels,  and  on  that  grow 
fat  and  stout,"  which  alleged  salutary  results  applied  to  the 
stronger  constituted  only;  the  weaker  died  off.53  The  con- 
temptuous manner  in  which  the  worker  was  looked  down  upon 
may  be  judged  from  this  sentence  in  De  la  Chesnaye's  Memoir: 
"  M.  de  Lauzon  was  not  liked,  because  of  the  little  care  he 
took  in  maintaining  his  dignity,  living  as  he  did  without  a 
servant,  and  eating  only  pork  and  pease,  like  a  mechanic  or 
peasant."  54 

Such  manufactories  as  existed  were  often  conducted  by  the 
monks,55  thus  placing  the  Church  in  the  double  capacity  of 
theological  and  employing  master.  Mendicants  and  vagrants 

53  Parkman's  Old  Regime  in  Canada,  Vol.  II,  p.  39. 

54  Report  on  Canadian  Archives,  1899  Supplement. 

55  Thus  the  Hospital  Monks  of  Montreal  were  given,  in  1698,  au- 
thority to  establish  manufactories  for  arts  and  trades  on  their  prem- 
ises.—  Ibid.,  p.  97. 


36  THE   ECCLESIASTICAL   AND  FEUDAL   LORDS 

were  already  in  evidence.  As  early  as  1674  a  decree  of  the 
Sovereign  Council  prohibited  all  begging  by  able-bodied  per- 
sons in  Montreal; 5*  vagrants  of  either  sex  were,  in  1676,  pro- 
hibited from  living  in  Montreal  without  special  permission ; 57 
an  ordinance  of  May  n,  1676,  prohibited  all  poor  and  needy 
persons  from  begging  in  Montreal  without  a  certificate  from 
the  parish  priest.58  On  May  12,  1686,  an  ordinance  was  issued 
against  vagrants  at  Port  Royal.59 

Cruel  and  Barbaric  Punishments 

Common  soldiers  were  brutally  lashed  and  put  to  the  tor- 
ture.*0 It  was  ordered,  in  1687,  that  deporting  women  of 
"  bad  character  "  to  France  was  not  a  sufficient  punishment ; 
they  were  to  be  compelled  to  do  heavy  physical  work  such  as 
drawing  water,  sawing  wood  and  attendance  on  masons.61  For 
contravening  certain  ordinances,  offenders  were  condemned  to 
kneel  with  a  rope  around  their  necks,  holding  a  lighted  torch, 
begging  pardon  of  God,  the  King,  and  the  tribunals  of  justice 
—  and  then  be  hung.82  A  soldier  of  the  Montreal  garrison  and 
some  shoemakers  were  accused  of  "  having  profaned  the  sacred 
words  of  the  New  Testament,"  and  of  misbehaving  to  a  cruci- 
fix; the  soldier  was  sentenced  to  be  beaten,  scourged  and  to 
spend  three  years  in  the  galleys,  and  the  shoemakers  were 
also  punished,  though  with  a  lighter  sentence.*3  A  Negress 
slave  found  guilty  of  "  setting  fire  to,  and  causing  the  burning 
down  of  the  town  of  Montreal "  was  hanged  and  burned.64 

56  Report  on  Canadian  Archives,  1899  Vol.,  p.  69. 

57  Montreal  Archives,   Sess.    Paper   No.   6,   p.   94,   Vol.   25,   Quebec 
Sess.  Papers,  1891. 

68  Ibid. 

59  Report  on  Canadian  Archives,  1899  Vol.,  p.  83. 

60  Report  on  Can.  Archives,  1887  Vol.,  pp.  ccxlviii  and  cclix. 
^Ibid.,  1899  Vol.,  p.  84. 

**Ibid.,  p.  61. 
63  Ibid.,  p.  151. 
p.  143. 


THE   ECCLESIASTICAL   AND  FEUDAL   LORDS  37 

For  some  slight  resistance,  law-breaking  and  violence,  one  Ma- 
thurin  Martin  was  condemned  to  stand  at  the  main  door  of 
his  parish  church  one  hour,  bareheaded,  with  irons  on  his  feet, 
and  a  placard  around  his  neck  inscribed,  "  A  Rebel  to  the 
Law!"65 

Obedience  to  constituted  authority  was  maintained  by  brand- 
ing, lashing,  shackling,  mutilation  and  by  prisons,  the  galleys, 
burning  and  hanging. 

65  Montreal  Archives,  etc.,  p.  207. 


CHAPTER  III 
THE  HUDSON'S  BAY  COMPANY 

King  Charles  II  found  in  America  an  easy  way  of  rewarding 
servitors  and  favorites.  To  one  group  of  these  he  gave  an 
extensive  baronial  feudal  dominion  in  Virginia.  Another 
group  of  intimates  and  servers  composed  of  Prince  Rupert, 
Count  Palatine  of  the  Rhine,  Duke  of  Bavaria,  Cumberland, 
etc.,  the  Duke  of  Albermarle,  otherwise  General  Monk,  who 
had  been  instrumental  in  restoring  Charles  II  to  the  throne, 
the  Earl  of  Craven,  Lord  Arlington,  Lord  Ashley  together 
with  Sir  John  Robinson,  Sir  Charles  Vyner  and  other  knights 
and  merchants  of  London,  obtained  from  Charles  what  turned 
out  to  be  a  far  more  substantial  and  enduring  gift.  This  was 
the  charter  in  perpetuity  for  the  Hudson's  Bay  Company, 
granted  by  Charles  II  in  1670  to  "  the  Governor  and  Com- 
pany of  Adventurers  Trading  into  Hudson's  Bay." 

At  the  very  time  that  Charles  munificently  conferred  this 
charter,  Canada  was  claimed  as  French  territory;  and  in  fact 
the  King  of  France,  43  years  previously,  had  granted  a  similar 
charter  to  a  French  company.  Canada  —  or  at  least  what 
was  then  called  Canada  —  did  not  become  British  territory 
by  conquest  until  more  than  a  century  after  the  granting  of 
the  Hudson's  Bay  Company's  charter.  It  was  the  asserted 
illegality  of  the  whole  charter  that  much  later  caused  the  most 
emphatic  protests  1  against  the  alleged  usurpations  and  extrava- 
gant claims  of  that  Company.2 

*The  charter  was   granted   on  the  nominal   condition   that   a  new 

2  In  his  testimony  before  the   Canadian   Legislative   Committee  of 

38 


THE  HUDSON'S  BAY  COMPANY  39 

Extraordinary  Powers  Conferred 

The  charter  granted  by  Charles  II  to  the  Hudson's  Bay 
Company  conferred  the  most  extraordinary  powers  and  sweep- 
ing privileges. 

The  Company  was  endowed  with  an  exclusive  and  perpetual 
monopoly  of  trade  and  commerce  of  all  the  seas,  straits,  bays, 
rivers,  lakes,  creeks,  and  sounds  "  in  whatsoever  latitude  they 
shall  be"  that  lay  within  the  entrance  of  Hudson's  Straits 
"  together  with  all  the  lands,  countries  and  territories  "  adjacent 
to  those  waters  "  not  now  possessed  by  any  of  our  own  sub- 
jects or  the  subjects  of  any  other  Christian  Prince  or  State." 

Sovereignty  Guaranteed 

But  these  rights  and  privileges  were  by  no  means  all.  Be- 
sides the  exclusive  trade  and  commerce,  the  Company  was 
granted  possession  of  the  lands,  mines,  minerals,  timber,  fish- 
eries, etc.,  and  was  vested  with  the  full  power  of  making  laws, 
ordinances  and  regulations  at  pleasure,  and  of  revoking  them 
at  pleasure.  It  could  also  impose  penalties  and  punishments, 
"  provided  the  same  are  reasonable,  and  are  not  repugnant  to 
the  laws  of  England  " —  a  superfluous  provision  considering 
that  little  news  of  what  subsequently  happened  in  the  vast 

passage  to  the  "  South  Seas  "  was  to  be  discovered.  In  1746,  Arthur 
Dobbs  and  other  petitioners  insisted  that  the  Hudson's  Bay  Com- 
pany had  not  carried  out  this  condition,  and  that  its  charter  was 
void  and  forfeited.  Dobbs  and  associates  asked  in  vain  for  similar 
powers  and  privileges. —  Parl.  Report  of  Aug.  10,  1748,  British  House 
of  Commons. 

1857,  William  MacD.  Dawson,  head  of  the  Crown  Woods  and  Forests 
Branch  of  the  Government  at  Toronto,  stated  these  facts,  and  pointed 
out  that  the  early  boundaries  of  Canada,  or  New  France,  undisputedly 
included  the  whole  of  Hudson's  Bay.  The  petition  of  the  Board  of 
Trade  of  Toronto  likewise  set  forth  the  same  facts. —  See  Report  from 
the  Select  Committee  on  the  Hudson's  Bay  Company,  etc.,  House  of 
Commons,  1857,  p.  398,  and  Ibid.,  Appendix  No.  XII,  p.  435.  For  fuller 
details  see  Chapter  IX  of  this  volume. 


4O  THE    HUDSON  S   BAY    COMPANY 

wilderness  controlled  by  the  Hudson's  Bay  Company  ever 
reached  England,  although  the  profits  never  failed  to  reach 
there. 

No  British  subjects  were  allowed  to  trade  within  the  Com- 
pany's territories  without  leave  from  the  Company  in  writing 
and  under  its  seal;  if  this  law  was  violated  all  goods  of  the 
trespassers  brought  to  England  were  to  be  forfeited,  one-half 
to  go  to  the  King,  and  the  other  half  to  the  Company.  No 
liberty  of  trade  was  to  be  given  by  the  King  to  any  person 
without  the  Company's  consent.  There  was  to  be,  it  was  pro- 
vided, one  vote  at  the  Company's  meetings  for  every  £100  put 
in.  All  of  the  territories,  forts,  factories,  agencies,  etc.,  were 
placed  under  the  absolute  jurisdiction  of  the  Company,  which 
was  vested  with  the  right  of  appointing  Governors  and  other 
officials  to  preside  in  its  territories,  and  judge  in  all  causes,  civil 
and  criminal,  according  to  the  laws  of  England ;  it  was  further 
provided  that  criminals  could  be  judged  on  the  spot  or  be 
sent  to  England  for  trial. 

Force  Placed  at  the  Company's  Disposal 

For  the  protection  of  its  trade  and  territory  the  Company 
was  empowered  to  employ  an  armed  force,  appoint  com- 
manders, erect  forts  and  take  other  necessary  measures.  If 
any  British  subject  was  found  trading  without  the  Company's  • 
leave,  the  Company  could  seize  him  and  pack  him  off  to  Eng- 
land for  trial.  All  admirals  and  other  naval  and  military  of- 
ficers, also  mayors,  sheriffs  and  other  authorities  were  obliged, 
by  the  terms  of  the  charter,  to  aid  and  assist  in  the  execution 
of  the  rights,  powers  and  privileges  thus  granted  to  "  the 
Governor  and  Company  of  Adventurers  Trading  into  Hud- 
son's Bay,"  otherwise  the  Hudson's  Bay  Company  of  which 
Prince  Rupert  was  named  first  Governor.3  The  only  payment 

3  The    full    text    of    this    remarkable    charter    is    given    in    Report 


THE  HUDSON'S  BAY  COMPANY  41 

demanded  for  these  immense  powers  was  that  the  Company 
was  required  to  pay  two  elks  and  two  black  beavers  when- 
ever and  as  often  as  "  His  Majesty,  and  his  Majesty  and  his 
successors"  should  enter  their  (the  Company's  territories), 
etc. 

Thus  came  into  existence  a  Company  of  mighty  and  in- 
trenched powers  which  since  that  time  to  this  present  day  has 
had  the  most  dominating  relation  to  the  economic  develop- 
ment and  the  economic  exploitation  of  Canada.  The  enor- 
mous profits,  compounded  and  invested  and  re-invested  with 
multifold  returning  profits  which  the  Hudson's  Bay  has  drawn 
from  Canada  during  more  than  240  years  of  its  aggressive 
existence,  can  be  traced  back  to  the  gratuitous  charter  in  per- 
petuity that  Charles  II,  in  a  bold  "  royal  stroke  of  business  " 
granted  for  a  huge  territory  to  which  (so  far  as  strict  tech- 
nical legal  jurisdiction  went)  it  is  a  question  whether  his 
government  had  the  remotest  claim. 

Stock  Watering  Begins  Early 

The  Hudson's  Bay  Company  had  not  been  long  in  operation 
before  it  began  a  process  of  stock-watering.  In  1676  its  stock 
was  £10,500.  In  1690  the  stock  was  trebled,  not  by  subscrip- 
tion but  by  the  creation  of  a  nominal  or  watered  stock,  and  the 
capital  stock  was  increased  to  £31,500.  By  the  same  hydraulic 
process  the  stock  was  again  trebled  and  declared  to  be  £94,500, 
and  a  subscription  was  paid  in  of  £3,150,  which  was  also 
trebled.  Of  the  total  capital  of  £103,950  on  December  23, 
1720,  only  £13,150  had  been  actually  paid  in.4 

from  the  Select  Committee  on  the^  Hudson's  Bay  Co.,  etc.  (ordered  by 
the  House  of  Commons  to  be  printed,  July  31  and  August  n,  1857), 
Appendix  No.  XI.  Enclosure  A,  pp.  411-413. 

4  These  facts  are  incorporated  in  the  Report  from  the  Committee 
Appointed  to  Inquire  into  the  State  and  Condition  of  the  Countries 
Adjoining  Hudson's  Bay  and  the  State  of  Trade  Carried  on  There, 
1749,  contained  in  Vol.  40  of  Imperial  Blue  Books  on  Affairs  Relating 


42  THE    HUDSON  S    BAY    COMPANY 

Manifestly  there  must  have  been  large  profits  to  justify 
this  successive  stock-watering.  The  profits  were,  in  truth, 
not  merely  large  but  great.  In  response  to  a  summons  from 
the  Lords  of  the  Committee  of  Privy  Council  for  Trade,  J. 
H.  Pelly,  Governor  of  the  Hudson's  Bay  Company  in  1838, 
examined  the  old  books  and,  in  a  communication  dated  Hud- 
son's Bay  House,  February  7,  1838,  informed  the  committee 
that :  — 

Great  Profits  from  the  Start 

"  Between  the  years  1670  and  1690,  a  period  of  20  years,  the 
profits  appear  to  have  been  very  large,  as,  notwithstanding 
losses  sustained  by  the  capture  of  the  Company's  establish- 
ments by  the  French  in  the  years  1682  to  1688,  amounting  to 
£118,014,  they  [the  Hudson's  Bay  Company]  were  enabled 
to  make  a  payment  to  the  proprietors  in  1684  of  50  per  cent. ; 
and  a  further  payment  in  1689  of  25  per  cent. 

"  In  1690  the  stock  was  trebled  without  any  call  being  made, 
besides  affording  a  payment  to  the  proprietors  of  25  per  cent, 
on  the  increased  or  newly-created  stock." 

Pelly  went  on  to  say  that  notwithstanding  losses  to  the 
amount  of  £97,500  in  the  years  1692-1697  because  of  the  cap- 
ture of  the  Company's  establishments  by  the  French,  and  the 
consequent  necessity  of  borrowing  money  at  six  per  cent,  in- 
terest, the  Company  "  were  enabled,  nevertheless,  in  1720, 
again  to  treble  their  capital  stock  with  only  a  call  of  10  per 
cent,  on  the  proprietors,  and,  notwithstanding  another  heavy 
loss  sustained  by  the  capture  of  their  establishments  by  the 
French  under  La  Perouse,  in  1782,  they  [the  Company]  ap- 
pear to  have  been  enabled  to  pay  dividends  of  from  5  to  12 
per  cent.,  averaging  nine  per  cent. ;  and  showing,  as  nearly  as 
I  am  able  to  judge  from  the  defective  state  of  the  books  dur- 

to  Canada.    Also  see  Report  from  the  Select  Committee  on  the  Hud- 
son's Bay  Company,  House  of  Commons,  1857,  p.  344. 


THE  HUDSON'S  BAY  COMPANY  43 

ing  the  past  century,  profits  on  the  originally  subscribed  cap- 
ital stock,  actually  paid  up,  of  between  60  and  70  per  cent, 
per  annum  from  the  years  1690  to  1800." 5  Further  large 
profits,  as  we  shall  see,  were  gathered  in  after  that  date. 

The  Company's  System  Described 

The  traffic  of  the  Hudson's  Bay  Company  was  then  and  long 
remained  almost  exclusively  that  of  furs.  These  continuing 
great  profits  were  extracted,  it  appears,  not  only  from  a  sys- 
tematic exploitation  of  the  Indian  tribes  but  also  by  a  rigor- 
ous, tyrannical  exploitation  of  the  Company's  own  employes, 
or  "  servants  "  as  they  were  then  called.  These  facts  are  not 
conjecture,  but  were  disclosed  in  the  ample  and  corroborative 
testimony  given  by  employes  of  the  Company  before  the  Select 
Investigating  Committee  of  the  House  of  Commons  in  1749. 

Matthew  Sergeant  testified  on  that  occasion  that  the  Indians 
bartered  their  furs  for  brandy,  tobacco,  blankets,  beads  and 
other  goods;  that  the  servants  of  the  Company  were  abso- 
lutely forbidden  to  trade  for  themselves  with  the  Indians; 
that  he  had  seen  one  employe  beaten  merely  for  going  to  an 
Indian  tent  to  light  a  pipe;  and  that  these  punishments  were 
inflicted  at  the  arbitrary  will  of  the  Governor  of  the  Company. 
Sergeant  further  testified  that  he  heard  frequent  complaints 
of  the  Indians  being  beaten  by  the  Governor;  that  but  very 
few  of  the  Indians  would  steal,  and  that  they  were  very  civil 
and  good-natured  when  sober.  The  chief  complaint  of  the  In- 
dians, said  Sergeant,  was  that  they  were  allowed  too  little 
for  their  goods.6 

5  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
House  of  Commons,  1857,  Appendix  No.  XIII,  pp.  427-428.    The  Com- 
pany's  ancient  motto,   "  Pro  pelle  cutem  " —  skin    for   skin  —  certainly 
produced  results  justifying  b6\h  the  literal  and  figurative  application  of 
that  motto. 

6  Report  from  the  Committee  Appointed  to  Inquire  into  the  State 


44  THE  HUDSON'S  BAY  COMPANY 


Starvation  and  Lashing 

John  Hayter,  who  had  been  house  carpenter  for  the  Hud- 
son's Bay  Company  at  Moose  River,  Churchill  and  Albany 
(on  James'  Bay)  for  six  years,  testified  that  the  last  year  he 
was  there  the  Company's  servants  "  were  starved,  though  there 
were  victuals  enough  in  the  storehouse  " ;  that  men  were  lashed 
for  trading  with  the  Indians ;  and  that  one  man,  named  Pil- 
grim, died  from  want  of  provisions,  although  there  were  pro- 
visions enough  in  the  factory  [agency].7 

Edward  Thompson,  a  surgeon,  for  three  years  in  the  Com- 
pany's service  at  Moose  River,  testified  that  he  had  seen  the 
Company's  officials  abuse  the  Indians.  "  And  being  asked,  if 
he  knew  for  what  reason  the  Governors  beat  the  Indians,  he 
said,  He  remembered  an  Instance  of  two  Indians  almost 
starved,  who  came  down  aboard  them  to  get  some  bread  and 
cheese ;  upon  which  the  Governor  took  an  Oar  and  beat  them 
most  unmercifully,  saying,  '  I'll  teach  you  to  go  aboard  without 
my  leave.'  "  That  the  Governor  could  not  imagine  that  these 
Indians  had  been  trafficking,  since  he  knew  they  had  not  one 
skin;  and  the  Witness  thinks  his  Reason  for  treating  them 
in  that  manner  was  that  they  would  give  the  witness  and  the 
Rest  some  Intelligence  of  the  Country."  Thompson  added 
that  he  never  knew  the  Indians  to  pilfer  "  except  when  hard 
put  to  it."  8 

Shortweighting  Practised 

That  shortweighting  was  then  practised  was  shown  by  the 
testimony  of  Christopher  Bannister,  armorer  for  the  Hudson's 
Bay  Company  for  22  years.  Asked  whether  the  Company  did 

and  Condition  of  the  Countries  Adjoining  Hudson's  Bay,  and  the  State 
of  Trade  Carried  on  There,  Imperial  Blue  Books  on  Affairs  Relating 
to  Canada,  Vol.  40,  p.  220. 

7  Ibid.,  p.  222. 

8  Ibid.,  p.  223. 


THE  HUDSON'S  BAY  COMPANY  45 

not  give  a  better  price  to  the  Indians  than  formerly  for  their 
furs  he  replied  that  he  believed  not ;  "  for  that  he  himself  had 
been  ordered  to  shorten  the  Measure  for  Powder  which  ought 
to  be  a  Pound,  and  within  these  10  years  had  been  reduced  to 
an  Ounce  or  two/' 9 

The  same  fact  of  cheating  the  Indians  was  testified  to  by 
Richard  White  who  had  been  for  more  than  10  years  with  the 
Hudson's  Bay  Company  at  Churchill.  He  stated  that  the  trade 
with  the  Indians  was  fixed  by  a  Company  Standard  of  In- 
structions, and  that  the  Governors  never  traded  lower  than 
the  Standard  directed,  but  on  the  contrary  generally  doubled 
the  Standard ;  — "  that  is,  where  the  Standard  directs  one  skin 
they  generally  take  two."  Testifying  further,  White  stated 
that  one  of  the  Company's  servants  had  been  put  in  irons 
and  whipped  for  conversing  with  Indians ;  that  the  Company's 
men  were  positively  prohibited,  on  pain  of  forfeiting  all  wages, 
from  conversing,  trading  and  trafficking  with  the  Indians,  di- 
rectly or  indirectly.10 

Various  other  witnesses  testified  that  the  Company's  gover- 
nors would  not  allow  them  to  raise  even  a  little  grain  and  veg- 
etables for  themselves.  The  Company  allowed  no  considera- 
tion to  interfere  with  its  monopoly  or  profits ;  it  reserved  the 
exclusive  right  to  itself  not  only  to  sell  but  to  raise  produce. 
Accustomed  now  to  the  use  of  guns  in  hunting,  the  Indians 
were  forced  to  depend  upon  the  Company  for  gunpowder;  if 
denied  this,  it  was  often  equivalent  to  consigning  them  to 
starvation.  This  fact,  as  we  shall  see  in  a  later  chapter, 
eventually  produced  conditions  of  the  most  tragic  character, 
causing  frequent  and  widespread  mortality  among  various 
Indian  tribes  throughout  Canada. 

9  Ibid.,  p.  225. 

10  Ibid.,  pp.  217-219.    Of  these  and  similar  long-prevalent  practices, 
the  reader  will  find  further  ample  and  corroborated  details  in  Chap- 
ters VIII  and  IX  of  this  volume. 


46  THE  HUDSON'S  BAY  COMPANY 

Liquor  for  Furs 

When  liquor  was  first  introduced,  it  was  brought  over  from 
Europe  in  large  barrels,  but  in  the  overland  transportation 
it  was  found  convenient  to  divide  it  into  small  kegs.  By  di- 
luting the  liquor  with  water,  a  greater  quantity,  of  course, 
produced  a  greater  amount  of  furs.  Much  later  the  Indians 
learned  that  poured  on  a  fire,  good  liquor  would  flame  up; 
but  if  diluted  it  would  quench  the  fire.  Hence  the  common 
usage  of  the  term  "  fire  water  "^  among  the  Indians. 

Writing  in  1752,  Joseph  Robson  declared  that  the  Hudson's 
Bay  Company  never  gave  orders  for  "  virtue  and  sobriety  until 
after  several  hearings  in  which  its  barbarity  to  the  natives 
and  their  servants  was  proved  by  sundry  affidavits,"  and  that 
the  Company  "  had  never  attempted  to  civilize  the  one  or  sent 
over  a  clergyman  for  the  instruction  of  the  other,  nor  kept 
up  -the  least  appearance  of  any  factory  in  the  Bay  .  .  ."  n 
But  this  display  of  reformation  was  of  the  most  superficial 
and  ephemeral  nature,  intended  for  public  effect.  As  we  shall 
have  frequent  occasion  to  note  in  later  chapters,  the  proc- 
ess of  unmitigated  exploitation  was  carried  on  by  the  Hud- 
son's Bay  Company  for  more  than  a  century  later. 

Thanks  to  this  early  parliamentary  investigation,  we  are 
able  to  get  some  salient  details  of  the  methods  used  in  the 
early  years  of  the  Hudson's  Bay  Company  which  has  been 
and  still  is  so  puissant  a  factor  in  the  economic  life  of  Canada. 
The  testimony  of  nearly  two  centuries  ago  affords  some  sig- 
nificant glimpses  into  the  methods  employed  in  the  primi- 
tive accumulation  of  capital  in  Canada.  It  was  estimated 
that  by  1857  the  Hudson's  Bay  Company  chiefly  had  pulled 
£20,000,000  sterling  in  profits  out  of  Canada.  But  this  sum 

11  An  Account  of  Six  Years'  Residence  in  Hudson's  Bay,  from  1733 
to  1736  -and  1744  to  1747,  by  Joseph  Robson,  Late  Surveyor  of  the 
Buildings  to  the  Hudson's  Bay  Co.,  London,  1752,  pp.  55-56. 


THE  HUDSON'S  BAY  COMPANY  47 

is  by  no  means  to  be  estimated  by  the  present  purchasing 
power  of  money.  During  the  decades  and  centuries  when 
money  was  of  greater  value  than  in  its  later  progressive  de- 
cline in  purchasing  power,  every  pound  or  dollar  was  of  far 
greater  value  than  subsequently.  Judged  by  modern  stand- 
ards, this  £20,000,000  obviously  represented  an  amount  many 
times  greater.  Moreover,  gathered  in  as  it  was  during  the 
course  of  nearly  two  centuries,  it  was  repeatedly  compounded 
by  repeated  investments  and  reinvestments. 

Here  was  one  of  the  prime  origins  of  the  capital  flowing 
into  England,  part  of  which  capital  went  later  into  factories, 
mines  and  other  capitalist  concerns  at  home,  and  part  into 
investments  in  Canada  and  elsewhere.  An  additional  source 
of  the  origin  of  English  capital  was  the  profits  derived  from 
the  traffic  in  Negro  slaves. 

Of  the  later  history  of  the  powerful  Hudson's  Bay  Com- 
pany :  —  its  exploitation  of  the  Indian  tribes ;  its  wars  with 
competitive  trading  companies;  its  supremacy  over  a  stupen- 
dous territory,  reaching  even  to  what  is  now  San  Francisco; 
its  methods  and  its  profits ;  its  demanding  and  receiving  great 
sums  from  the  United  States  and  Canada  for  the  surrender- 
ing of  title  to  territory  which  it  claimed  under  the  grant  of 
Charles  II;  and  its  retention  of  immense  and  valuable  areas, 
much  of  which  it  still  owns  —  all  of  these  facts  will  be  nar- 
rated in  subsequent  chapters.  From  the  Hudson's  Bay  Com- 
pany came  officials  who  developed  into  land,  railroad,  steam- 
ship, and  bank  magnates  —  men  promoting  or  controlling 
transportation  and  banking  systems  and  owning  vast  wealth 
and  resources. 


CHAPTER  IV 
WARS  OF  THE  FUR  TRADERS  AND  COMPANIES 

In  the  long  and  desperate  contest  between  English  and 
French  traders  to  get  control  of  the  fur  trade,  the  supremacy 
gradually  passed  to  the  English.  This  triumph  resulted  from 
the  purely  economic  advantages  they  possessed,  and  from  their 
ability  to  supply  rum  and  cloth  cheaper  than  the  French. 

As  early  as  1708  the  French  Government  complained  to  its 
officials  in  Canada  that  the  English  gave  nearly  double  the 
price  that  the  French  did  for  beaver;  that,  moreover,  their 
articles  of  merchandise  were  cheaper,  and  that  a  remedy  must 
be  sought  "  for  this  unfortunate  state  of  things."  l  But  no 
remedy  ever  came.  In  a  communication  dated  November  10, 
1724,  to  Governor  William  Burnett,  of  New  York,  Cadwal- 
lader  Golden,  a  crown  official  and  later  lieutenant-governor 
of  that  province,  set  forth  conditions  in  his  "  Memoir  on  the 
Fur  Trade."  Of  Canada  he  said  that  "  the  Governor  and  other 
officers  have  but  a  scanty  allowance  from  the  King,  and  could 
not  subsist  were  it  not  for  the  perquisites  they  have  from  this 
Trade.  Neither  could  their  Priests  find  any  means  to  satisfy 
their  ambition  and  Luxury  without  it.  So  that  all  heads  and 
hands  are  employed  to  advance  it." 2  Then  proceeding  to 
describe  the  various  difficulties  of  the  French  in  transporting 
goods  via  the  St.  Lawrence,  Golden  went  on:  — 

1  Report  on  Canadian  Archives,  1899  Vol.,  p.  414. 

2  London  Documents,  Documents  Relating  to  the  Colonial  History  of 
the  State  of  New  York,  Vol.  V,  p.  727.     (For  purposes  of  abbrevia- 
tion these  documents  are  frequently  referred  to  hereafter  as  N.  Y.  Col. 
Docs.) 

48 


WARS   OF   THE  FUR   TRADERS   AND   COMPANIES  49 

"  Besides  these  difficulties  in  the  Transportation,  the  French 
labor  under  greater  in  the  purchasing  of  Indian  goods  proper 
for  the  Indian  market,  for  the  most  considerable  and  most 
valuable  part  of  their  Cargo  consists  in  Strouds,  Duffils, 
Blankets  and  other  Woolens  which  are  bought  at  a  much 
cheaper  rate  in  England  than  in  France.  The  Strouds  which 
the  Indians  value  more  than  any  other  clothing,  are  only 
made  in  England,  and  must  be  transported  into  France  before 
they  can  be  carried  to  Canada. 

"  Rum  is  another  considerable  Branch  of  the  Indian  Trade, 
which  the  French  want,  by  reason  they  have  no  commodities 
in  Canada  fit  [to  exchange]  for  the  West  India  Markets. 
This  they  supply  with  Brandy  at  a  much  dearer  rate  than  Rum 
can  be  purchased  at  New  York  though  of  no  more  value  with 
the  Indians.  Generally  all  the  goods  used  in  the  Indian  Trade 
except  Gunpowder  and  a  few  trinkets  are  sold  at  Montreal 
for  twice  their  value  at  Albany,  [N.  Y.]  "  The  English, 
Colden  concluded,  had  much  the  advantage  of  the  French,  "  and 
the  Indians  will  certainly  buy  where  they  can  at  the  cheapest 
rate."  3 

English  Traders  Sell  Cheaper  than  the  French 

The  reports  of  the  French  officials  confirmed  Colden's  state- 
ments. The  English,  reported  De  Vaudreuil  and  Begon,  May 
7,  1726,  in  their  memorandum  on  the  "  Affairs  of  Canada," 
"  adopt  every  means  to  accomplish  their  purpose ;  making  pres- 
ents to  the  Indians,  furnishing  them  goods  at  a  very  low  rate, 
and  supplying  them  with  Rum  which  is  their  favorite  bever- 
age." They  added  that  Sieur  de  Longueuil,  in  the  course  of 
his  voyage  to  Niagara,  met  more  than  100  canoes  carrying 
peltries  to  the  English  and  carrying  back  rum.4 

3  Ibid.,  pp.  729-730.    All  of  the  strouds  carried  by  the  French  into 
Indian  territories,  as  well  as  other  large  quantities  of  goods  for  use 
among  the  French  themselves  were  conveyed  from  Albany  to  Montreal. 

4  Paris  Docs.,  N.  Y.  Col.  Docs.,  Vol.  IX,  p.  953. 


5O  WARS   OF   THE  FUR   TRADERS   AND   COMPANIES 

The  British  Government  issued  orders  prohibiting  the  de- 
bauching of  Indians  with  rum,  but  it  was  impossible  to  enforce 
this  order  in  the  great  stretches  of  wilderness  far  removed 
from  official  eyes. 

Moreover,  many  of  the  officials  not  only  connived  at  the 
traffic  but  were  themselves  financially  interested  in  the  trad- 
ing operations.  A  petition,  in  1764,  signed  by  many  of  the 
foremost  merchants  in  the  province  of  New  York  —  men  who 
became  founders  of  rich  and  aristocratic  American  families  — 
Henry  Bleeker,  John  De  Puyster,  Abraham  Schuyler,  and 
sundry  others  —  sent  a  remonstrance  to  the  Lords  of  Trade 
against  the  order  prohibiting  rum.  Complaining  that  the  pro- 
hibition against  rum  and  other  liquors  had  resulted  in  a  con- 
siderable decrease  of  trade,  they  protested  that  the  prohibi- 
tion was  an  infringement  upon  the  Indians'  "  liberty  of 
trade  " ;  highly  solicitous  were  they  of  the  full  and  unrestricted 
right  of  the  Indians  to  submit  to  debauchery,  cheating  and 
impoverishment.  "  Whereas,"  the  petition  read  on,  "  when  the 
Vent  of  liquors  is  allow'd  amongst  them,  it  spurs  them  on  to 
an  unwearied  application  in  hunting  in  order  to  supply  the 
Trading  places  with  Furs  and  Skins  ir$  exchange  for 
Liquors."  5 

Cheap  Rum  Beats  Dear  Brandy 

The  war  of  the  fur  traders  resolved  itself  in  one  aspect, 
then,  into  rum  against  brandy;  and  rum,  the  cheaper  drink, 
succeeded  in  winning  the  Indians'  trade  in  the  contested  dis- 
tricts. 

Of  the  profits  of  the  French  East  India  Company  there 
is  little  available  record;  dispatches  from  Canada,  in  1749,  to 
the  French  Government  stated  that  the  "  India  Company  has 
experienced  no  real  loss,  as  it  pretends,  but  even  that  in  the 
two  years  of  1746  and  1747  it  has  realized  a  profit  from  the 

5  London  Docs.,  N.  Y.  Col.  Docs.,  Vol.  VII,  p.  613. 


WARS   OF  THE   FUR   TRADERS   AND   COMPANIES  5 1 

Beaver  trade  of  430,785  livres." 6  Lieutenant-Governor 
Milnes  informed  Lord  Hobart,  in  1802,  that  the  entire  value 
of  furs  exported  by  the  French  East  India  Company  (which 
had  had  the  sole  privilege  of  exporting  beaver  peltries),  never 
exceeded  £140,000  sterling,  and  that  it  was  often  less,  particu- 
larly in  1754,  when  it  amounted  to  £64,000,  and  in  1755  to 
£52,000  only,  when  it  was  considered  a  declining  trade.7  It 
was  during  this  time  that  Marquis  De  La  Jonquiere  (Governor 
of  Canada  from  1749-1752),  arrogated  to  himself  a  monopoly 
of  the  peltry  traffic,  and  amassed  an  immense  fortune;  an 
incorrigible  miser,  he  denied  himself  the  veriest  necessities  of 
life  even  in  his  last  moments. 

The  commercial  superiority  of  the  English  was  rapidly  un- 
dermining the  French  traders  and  merchants  everywhere,  de- 
spite the  advantage  that  the  French  had  of  drastic  laws 
and  armed  forces.  This  constant  process  was  assisted 
by  the  prevalence  of  widespread  corruption  and  graft  among 
French  officials  in  Canada,  which  had  much  to  do  with  pre- 
paring the  way  for  British  conquest. 

Official  Graft  and  Corruption 

Heading  the  band  of  official  pirates  was  Intendant  Francois 
Bigot.  His  chief  confederate  was  Joseph  Cadet,  son  of  a 
Quebec  butcher.  Bigot,  in  1756,  got  Joseph  Cadet  appointed 
Commissary  General.  In  the  next  two  years  the  industrious 
Cadet,  well  seconded  by  his  accomplices,  P'ean,  Maurin,  Cor- 
pron  and  Pennisseault,  sold  to  the  King,  as  the  State,  for 
about  23,000,000  francs,  army  provisions  and  other  supplies 
which  had  cost  them  11,000,000  francs.  The  audacious 
plunderers  pocketed  a  profit  of  about  12,000,000  francs. 

But  this  was  only  one  of  their  numerous  ways  of  grafting. 

6  Paris  Docs.,  N.   Y.  Col  Docs.,  Vol.  X,  p.  201. 

7  Canadian  Archives,  Series  Q.,  Vol.  89,  p.  144. 


52  WARS   OF   THE  FUR   TRADERS   AND   COMPANIES 

They  accumulated  fortunes  from  the  transportation  of  mili- 
tary stores  and  in  other  lines  of  similar  activity,  and  tney  spec- 
ulated in  grain  and  other  commodities  of  which  Bigot,  by 
reason  of  his  authority,  was  conveniently  able  to  raise  or  de- 
press the  price  with  the  most  agreeable  results. 

Meanwhile  Bigot  was  giving  sumptuous  entertainments  at 
his  palace  in  Quebec  and  gambling  lavishly;  he  lost  204,000 
francs  in  1758, —  not  an  irremediable  disaster,  by  any  means, 
since  he  well  knew  how  to  refill  his  chest.  Cadet  became  the 
richest  man  in  the  colony.8 

The  King's  Minister  in  France  soon  knew  of  this  great 
plundering.  "  I  am  no  longer  astonished  that  immense  for- 
tunes are  seen  in  Canada,"  wrote  Berryer  to  Bigot,  January 
J9>  I759-  General  Montcalm  wrote  from  Montreal  to  Ver- 
sailles three  months  later,  declaring  that  the  Colony  was  going 
to  ruin  because  of  Governor  Vaudreuil's  incapacity  and  the 
rapacity  of  Bigot  and  accomplices  who  were  busy  enriching 
themselves.9 

Thefts  of  24,000,000  Francs 

The  full  thefts  of  Bigot  and  his  crew  amounted  to  perhaps 
24,000,000  francs.  The  testimony  at  Cadet's  trial  in  Paris 
showed  that  both  civil  and  military  officers  at  all  the  prin- 
cipal forts  had  been  bribed  to  attest  the  legitimacy  of  his  ac- 
counts.10 Bigot  and  another  were  banished  for  life  and  their 
property  confiscated,  and  certain  other  members  of  the  clique 
were  banished  for  a  limited  period.  The  total  amount  in 
restitution  that  the  judgment  of  the  court,  in  1763,  compelled 
Bigot  and  his  numerous  band  of  confederates  to  pay  was 

8  Parkman's  Montcalm  and  Wolfe,  Vol.  II,  p.  28. 

9  Report  on  Can.  Archives,  1887  Vol,  p.  ccxix. 

10  Parkman  quotes  a  writer  of  the  time  on  Canada :     "  This  is  the 
land   of    abuses,    ignorance,    prejudice    and    all    that    is    monstrous   in 
government.     Peculation,  monopoly  and  plunder  have  become  a  bot- 
tomless abyss."    Montcalm  and  Wolfe,  Vol.  II,  p.  29. 


WARS   OF  THE  FUR   TRADERS   AND   COMPANIES  53 

11,400,000  francs,  of  which  sum  Cadet  was  condemned  to  pay 
6,000,000  francs.11  This  crew  of  grafters  could  congratulate 
themselves  on  their  easy  sentences;  they  were  not  put  to  the 
torture,  as  they  had  ordered  done  to  common  soldiers,  and 
they  completely  escaped  that  lashing,  shackling,  mutilating, 
branding  or  hanging  to  which  they,  during  the  very  time  that 
they  were  committing  their  enormous  frauds  and  thefts,  had 
relentlessly  condemned  poor  offenders  whose  only  crime  was 
that  they  had  committed  some  petty  theft  or  violated  some 
inconsequential  law. 

English  Become  Masters  of  the  Fur  Trade 

Following  the  battle  of  Quebec  and  the  British  conquest 
of  Canada,  the  English  became  absolute  masters  of  the  fur 
trade. 

Reporting,  on  April  24,  1780,  to  General  Haldimand  on  the 
state  of  the  fur  trade,  Charles  Grant,  a  leading  fur  trader,  esti- 
mated that  in  recent  years  it  had  produced  an  annual  return  to 
Great  Britain  in  furs  of  £200,000  sterling.  There  were,  per- 
haps, he  stated,  90  to  100  canoes  in  the  fur  trade  yearly  leav- 
ing Montreal  alone  for  the  Great  Lakes;  and  that  besides 
carrying  dry  goods,  "  every  canoe  carries  about  200  gallons  of 
rum  and  wine."  12 

Lieutenant-Governor  Milnes  reported  to  Lord  Hobart,  in 
1802,  that,  "  Since  the  Conquest  the  Spirit  of  British  Com- 
merce has  brought  the  Fur  Trade  into  Regular  Form;  it  is 
now  carried  on  upon  System,  and  a  large  capital  is  invested 
by  a  Company  of  Merchants  long  since  known  by  the  name 
of  the  North  West  Company,  who  have  extended  the  Fur 
Trade  very  far  into  the  Interior  of  the  North  West  parts  of 
this  Continent,  where  they  have  established  numerous  Trading 

^Report  on  Can.  Archives,  1899  Vol.,  pp.  187-189. 

12  Report  on  Can.  Archives,  1888  Vol.,  Note  E.,  pp.  59-60. 


54  WARS   OP   THE   FUR   TRADERS   AND   COMPANIES 

Houses."  13  Lieutenant-Governor  Milnes,  it  may  be  remarked, 
was  extremely  partial  to  the  schemes  and  demands  of  the 
powerful  fur  traders  who,  in  return  for  his  good-will,  pre- 
served a  discreet  silence  on  the  extensive  land  grants  fraudu- 
lently given  under  his  administration.  Milnes  was  not  only 
generous  to  others  in  this  respect  but  to  himself;  he  con- 
trived to  get  48,082  acres  of  the  public  domain  by  signature 
of  the  Duke  of  Portland,  Governor  General  of  Canada. 
Nearly  all  of  the  leading  men  in  the  North  West  Company 
likewise  profited  by  gratuitous  gifts  of  public  land  made  by 
Milnes.14  We  shall  have  need  of  referring  to  these  facts 
more  in  detail  hereafter. 


The  North  West  Company 

Formed  by  a  number  of  Montreal  merchants  and  mercantile 
firms,  the  North  West  Company,  a  distinctively  Canadian  con- 
cern, developed  into  the  most  formidable  competitor  of  the 
Hudson's  Bay  Company. 

Among  the  original  founders  of  this  Company  were  Simon 
McTavish,  Todd  and  McGill,  Charles  Grant,  Benjamin  and  Jo- 
seph Frobisher,  the  firm  of  McGill  and  Patterson  and  five  other 
merchants  and  firms.  The  greater  part  of  the  capital  used  irr 
the  later  operations  of  the  North  West  Company  was  supplied 
by  Alexander  Ellice,  whose  son  Edward  subsequently  became 
so  powerful  and  leading  a  capitalist,  first  in  that  Company,  and 
subsequently  in  the  Hudson's  Bay  Company.  A  number  of 
Montreal  merchants  including  such  firms  as  Taylor  and  For- 
syth,  and  Robert  Ellice  and  Company,  were,  it  appears,  rolling 
up  fortunes  in  extortionate  charges  for  goods  supplied  to  the 

13  Ibid.,  1892  Vol.,  Note  E.,  p.  135. 

14  List  of  Lands  Granted  by  the  Crown  in  the  Province  of  Quebec 
from  1763  to  Dec.  31,  1890.     Printed  by  Order  of  the  Quebec  Legis- 
lature, 1891,  pp.  8-1 1.    See  Chapter  V  of  this  volume  for  fuller  de- 
tails. 


WARS   OF   THE   FUR   TRADERS   AND   COMPANIES  55< 

British  Government  for  the  Indians;  Taylor  and  Forsyth  in 
particular  were  accused  of  falsification  of  accounts  and  prose- 
cuted.15 General  Haldiman  wrote  to  Major  De  Peyster,  May 
8,  1780,  that  he  had  determined  to  order  Indian  presents  from 
England  "  to  save  the  enormous  expense  caused  by  the  greed 
of  traders."  16  Much  of  the  capital  invested  in  the  North  West 
Company  by  the  Montreal  merchants  came  from  this  process 
of  charging  exorbitant  prices  on  government  contracts. 

Returns  of  $250,000  a  Year 

In  1780  the  North  West  Company  estimated  its  annual  re- 
turns at  £50,000  sterling  in  furs  "  which  have  served  to  remit 
to  Great  Britain  in  payment  of  the  manufactures  imported 
from  the  Mother  Country." 17  Basing  its  application  upon 
its  services  in  discovering  and  extending  trade  in  new  terri- 
tory, far  in  the  North  West,  the  Company,  in  1784,  petitioned 
for  an  exclusive  license.  This  petition  was  favored  by  Lieu- 
tenant-Governor  Hamilton  on  the  ground  that  were  the  trade 
"  suddenly  laid  open  to  greedy  and  needy  adventurers,  the  re- 
turns might  be  very  great  for  a  short  period,  but  the  Indians 
would  be  drowned  in  rum,  and  exclusive  of  that  consideration, 
it  would  be  the  cause  of  endless  quarrels,  and  bloodshed  must 
be  of  consequence."  18 

Rum,  Violence  and  Murder 

The  success  of  the  North  West  Company,  and  "  the  great 
and  rapid  fortunes  "  which  many  of  those  in  it  had  amassed, 
Lieutenant-Governor  Milnes  wrote  in  1802,  led  to  the  estab- 
lishment, in  1800,  of  a  second  Canadian  Company,  called  the 

15  Report  on  Canadian  Archives,  1887  Vol.,  pp.  101-116. 

™Ibid.,  p.  225. 

« Ibid.,  1888  Vol.,  p.  61. 

18  Ibid.,  1800  Vol.,  Note  C.,  p.  48. 


56  WARS   OF  THE  FUR   TRADERS   AND   COMPANIES 

X.  Y.  Company,  headed  by  Sir  Alexander  Mackenzie  and 
Company.  This  Company  had  the  command  of  a  capital 
equal  to  that  of  the  North  West  Company.19 

Between  the  two  companies  a  furious  competition  set  in. 
Employe  often  murdered  employe  in  disputes  over  furs  and 
territory,  and  rum  was  used  in  the  most  widespread  and  shame- 
less way  to  debauch  the  Indian  tribes,  each  Company  seeking 
to  outdo  the  other  in  its  excesses  in  order  to  get  trade,  "  fear- 
less of  future  punishment,  because  they  know  that  the  Courts 
of  the  Canadas  cannot  take  cognizance  of  Crimes  committed 
where  they  traffick."  20 

The  murders  and  other  crimes  were  so  numerous  that  the 
Grand  Jury  at  Montreal,  September  10,  1802,  handed  in  a 
presentment  calling  attention  to  the  great  disorders  in  the  In- 
dian Country,  and  calling  for  a  remedy.21  At  this  time  the 
North  West  Company  had  117  trading  posts,  and  a  total  force 
of  1,058  men.22  The  number  of  peltries  shipped  from  Quebec 
for  the  nine  years  from  1793  to  1801,  inclusive,  was  enormous ; 
-^SSS  beaver  skins,  38,368  martin,  18,349  otter,  11,329 
mink,  5,483  fisher,  10,141  foxes,  19,286  bear,  169,811  deer, 
144,439  raccoons,  57,151  musk  rats,  and  furs  of  thousands  of 
wild  cat,  elk,  wolf,  kitt,  squirrel,  hare,  seal  and  other  pel- 
tries.23 

In  the  war  of  the  two  companies,  Indians  were  incited  to 
pillage  and  fire  upon  canoes  of  the  X.  Y.  Company ;  attempts 
—  often  successful  —  were  made  to  debauch  and  entice  away 
its  employes;  and  its  property  was  destroyed  by  treachery 
and  other  underhand  acts.24  As  the  force  of  the  North  West 

19  Ibid.,  1892  Vol.,  Note  E.,  Milnes  to  Lord  Hobart,  "  Courts  of  Jus- 
tice for  the  Indian  Country,"  pp.  135-136. 

20  Report  on  Canadian  Archives,  1892  Vol.,  p.  137. 

21  Ibid.,  pp.  139-140. 

22  Ibid.,  p.  142. 

23  Ibid.,  p.   143. 

24  John  Richardson  to  H.  W.  Ryland,  from  Montreal,  October  21, 
1802.—  Ibid.,  p.  145. 


WARS   OF   THE  FUR   TRADERS   AND   COMPANIES  57 

Company  was  two-thirds  greater  than  that  of  the  X.  Y.  Com- 
pany, it  was  not  easy  for  the  younger  company  to  retaliate, 
but  it  did  so  when  it  could.  Later  —  in  1805  —  the  two  com- 
panies fused. 


Conflict  of  the  Two  Large  Fur  Companies 

But  this  conflict,  murderous  as  it  was  to  both  Indians  and 
whites,  was  insignificant  compared  to  the  long  and  sangui- 
nary war  soon  breaking  out  between  the  North  West  Company 
and  the  Hudson's  Bay  Company.  Here  we  shall  have  to 
turn  to  the  testimony  given  in  1857  before  the  British  Parlia- 
mentary Committee,  by  Edward  Ellice,  then  loaded  with 
wealth,  and  a  Right  Honorable  Member  of  the  House  of  Com- 
mons, besides.  As  Ellice  had  been  connected  with  all  of  the 
companies,  his  testimony  can,  perhaps,  be  accepted  as  accu- 
rate and  unprejudiced. 

When  he  went  to  Canada,  in  1803,  Ellice  testified,  "  the 
whole  of  the  Canadian  Society,  every  person  of  eminence 
and  consequence  there,  was  then  engaged  in  the  fur  trade, 
it  being  the  only  trade  of  importance  in  the  Country."  Ellice 
explained  that  this  did  not  include  the  seigneurs,  and  went  on : 
"  The  trade  was  carried  on  with  countries  that  are  now  civil- 
ized regions,  and  where  large  cities  are  established.  It  was 
carried  on  upon  the  lakes,  Lake  Ontario,  Lake  Erie,  through 
the  Michigan  territory,  upon  the  Ohio,  the  Missouri,  the  Mis- 
sissippi, and  in  all  of  the  countries  to  the  north  of  Canada. 
I  was  perfectly  acquainted  with  the  details  of  that  trade  in 
1803,  and  with  the  persons  interested  in  it." 

Carrying  on  its  trade  westward  of  Lake  Superior,  the  North 
West  Company  come  into  acute  collision  with  the  forces  of 
the  Hudson's  Bay  Company.  The  North  West  Company  had 
the  advantage  of  being  directed  by  aggressive  Canadian  mer- 
chants and  traders  on  the  spot;  one  of  its  most  active 


58  WARS   OF  THE  FUR   TRADERS  AND   COMPANIES 

subalterns  was  Donald  Mackenzie,  a  young  Scotchman  who 
served  it  eight  years,  and  then  became  a  partner  in  the  United 
States  of  John  Jacob  Astor  who  was  deriving  returns  of 
$500,000  a  year  by  systematically  debauching  the  Indian  tribes 
with  whiskey  and  by  cheating,  impoverishing  and  indirectly 
murdering  them.25  The  Hudson's  Bay  Company  was,  on  the 
other  hand,  a  British  concern,  directed  from  London;  it  had 
long  since  passed  into  the  control  of  British  merchants,  al- 
though many  of  the  titled  aristocracy  were  among  its  stock- 
holders. 

Indians  Complain  of  Being  Wheedled 

Bloody  collisions  between  the  two  companies  kept  increas- 
ing. Ellice  testified  further  that,  in  1811,  Lord  Selkirk,  who 
brought  over  a  shipload  of  tenants  founded  a  settlement, 
now  Winnipeg,  on  the  Red  River,  and  joined  the  Hudson's 
Bay  Company.  According  to  a  remonstrance  sent  by  Chief 
Peguis  of  the  Salteau  Tribe,  on  the  Red  River,  to  the  Abo- 
rigines Protection  Society,  London,  Lord  Selkirk  had  by 
dubious  methods  obtained  from  that  tribe  an  immensely  val- 
uable area  of  land. 

The  settlers  sent  in  advance  by  Selkirk  promised  the  In- 
dians that  a  great  chief  who  was  to  follow  would  pay  the 
Salteau  tribe  well  for  their  land,  20  to  24  miles  of  it,  along 
the  Red  River.  The  tribe  then  consented  to  the  settlers  occu- 
pying the  land.  When  the  "  Silver  Chief  "  (as  the  Indians 
called  Selkirk)  arrived,  he  "told  us  that  he  had  little  with 
which  to  pay  us  for  our  lands  when  he  made  this  arrangement, 
in  consequence  of  the  troubles  with  the  North  West  Company. 
He,  however,  asked  us  what  we  most  required  for  the  present, 
and  we  told  him  we  would  be  content  until  the  following  year, 

25  See  the  specific  facts  in  the  chapters  on  the  Astor  Fortune,  Vol.  I, 
History  of  the  Great  American  Fortunes,  citing  government  docu- 
ments. 


WARS  OF   THE  FUR  TRADERS   AND   COMPANIES  59 

when  he  promised  to  return,  to  take  only  ammunition  and 
tobacco. 

"  The  Silver  Chief  never  returned,  and  either  his  son  or 
the  Hudson's  Bay  Company  have  ever  since  paid  us  annually 
for  our  lands  only  the  small  quantity  of  ammunition  which, 
in  the  first  instance,  we  took  as  a  preliminary  to  a  final  bar- 
gain about  our  lands."  This  pathetic  communication  went 
on  to  say  that  this  surely  was  repaying  the  Indian  Chief 
poorly  for  having  saved  the  Silver  Chief's  life,  when  Cuthbert 
Grant  with  116  warriors  had  made  plans  to  waylay  him  —  a 
move  frustrated  by  Chief  Peguis  and  his  entire  tribe.  Peguis 
bitterly  complained  that  in  return  for  the  small  quantity  of 
ammunition  and  tobacco  paid  yearly  to  his  tribe,  the  Hudson's 
Bay  Company  (which  had  paid  Selkirk's  executors  £84,111, 
1 8  shillings,  5  pence  for  his  Red  River  Settlement)26  now 
(1857)  "claim  all  of  the  lands  between  the  Assiniboin  and 
Lake  Winnipeg,  a  quantity  of  land  nearly  double  of  what  was 
first  asked  from  us.  We  hope  the  Great  Mother  [Queen 
Victoria]  will  not  allow  us  to  be  treated  so  unjustly  as  to 
allow  our  lands  to  be  taken  from  us  in  this  way."  27 

Selkirk's  Heir  Gets  $420,000 

This  digression  will  give  an  instance  of  the  methods  by 
which  a  great  area  of  landed  property,  then  of  much  value, 
and  later  of  enormous  value,  came  into  possession  of  the 
Hudson's  Bay  Company,  after  enriching  the  new  Earl  of 
Selkirk  to  the  sum  of  about  $420,000,  for  "  proprietary  rights  " 
for  which  (if  we  may  believe  the  protest  of  the  Salteau  tribe), 
neither  he  nor  the  Hudson's  Bay  Company  had  actually  ever 
paid.  Ellice  testified  in  1857  that  Selkirk,  in  addition  to 

26  Report  from   the   Select   Committee   on   the   Hudson's   Bay   Co., 
House  of  Commons,  1857,  Appendix  No.  xviii,  p.  449. 

27  Ibid.,  Appendix,  XVI,  pp.  444,  etc.     See  sequel  later. 


6O  WARS   OF  THE  FUR   TRADERS   AND   COMPANIES 

being  a  stockholder  in  the  Hudson's  Bay  Company,  was  the 
proprietor  of  a  large  tract  of  land  on  the  Red  River,  and 
claimed  that  this  territory  was  a  free  grant  made  by  the 
Hudson's  Bay  Company  to  Selkirk.  But  Ellice  did  not 
touch  upon  the  vital  point  of  when  and  how  the  Company 
had  ever  bought  it  from  the  Indians,  and  admitted  that  the 
alleged  grant  of  the  Company  to  Selkirk  was  "  a  private  trans- 
action and  was  never  published."  28 

Slaughter  in  the  Trade  War 

During  the  course  of  the  sanguinary  conflicts  between  the 
two  companies,  an  action  took  place  on  the  Red  River,  in  1815, 
between  the  armed  forces,  and  16  of  them  were  killed.  Sel- 
kirk seized  William  M'Gillivray,  principal  partner  of  the  North 
West  Company  and  his  property,  accusing  him  of  having  in- 
stigated these  murders,  and  M'Gillivray  made  counter  charges. 
Kenneth  Mackenzie  and  Simon  Frazer  were  also  arrested. 
Powerful  as  the  Hudson's  Bay  Company  was  in  England, 
however,  the  North  West  Company  was  all  powerful  in  Que- 
bec. Its  members  almost  completely  controlled  the  acts  of 
the  Government  and  the  Governor  in  Council,  and  finally  se- 
cured acquittal.  The  well-known  Judge  Reid,  says  a  biog- 
rapher, had  married  M'Gillivray's  sister,  "  and  this  mighty 
influence  had  something  to  do  with  the  final'  issue."  *9 

Rum  the  Great  Inducement 

The  methods  used  in  inciting  the  Indians  during  this  trading 
war  were  graphically  described  by  Ellice  in  his  testimony  be- 
fore the  Parliamentary  Investigating  Committee. 

*'  Rum,"  he  said,  "  was  given  to  the  various  parties  acting 

28  Ibid.,  p.  323. 

659  Borthwick's  History  of  Montreal,  p.  398. 


WARS   OF   THE  FUR   TRADERS   AND   COMPANIES  6l 

in  competition,  to  the  Indians  and  half-breeds;  the  whole 
country  was  demoralized;  the  Indian  tribes  were  in  conflict 
one  against  the  other.  In  fact,  whatever  a  particular  trader 
carrying  on  his  business  at  a  particular  post  thought  was  likely 
to  ruin  his  competitor  and  to  advance  his  own  interest  was 
done  without  the  least  regard  to  morality  and  humanity." 
Ellice  further  testified  that  the  use  of  spirits  was  constantly 
employed,  but  blamed  its  necessity  on  the  American  traders. 
If  there  was  a  contest  about  a  trading  post  on  the  frontier, 
he  said,  "  the  universal  article  used  to  corrupt  the  Indians  is 
spirits."  30  But,  in  turn,  the  United  States  Government  was 
making  indignant  remonstrances,  charging  the  Canadians  with 
responsibility  for  the  rum  traffic. 

The  Warring  Companies  Merge 

Such  a  war  was  extremely  costly,  was  the  conclusion  of 
both  companies.  Ellice  testified  that  it  was  he  who  in  1819 
or  1820  succeeded  in  uniting  all  interest  in  the  two  companies. 
This  merger  of  the  two  companies  into  what  has  remained  the 
present  Hudson's  Bay  Company  was  accompanied  by  two 
notable  incidents.  One  of  these  was  the  claim  now  advanced 
by  the  Hudson's  Bay  Company  (contrary  to  its  previous 
claims)  that  its  territory  extended  west  of  the  Rocky  Moun- 
tains. The  other  incident  was  the  further  inflation  of  the 
capital  stock  to  £400,000  —  an  amount  still  later  increased. 
An  Act  passed  in  1821  gave  the  Hudson's  Bay  Company  a 
license  for  the  exclusive  trade  for  21  years.  This  rounded 
out  the  merger,  and  assured  a  definite  period  of  complete 
monopoly. 

From  the  profits  of  the  North  West  Company  were  derived 

30  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
House  of  Commons,  1857,  p.  326.  Yet  during  this  very  time  the 
Hudson's  Bay  Company  was  boasting  that  its  missionaries  were 
"civilizing  the  heathen." 


62  WARS   OF   THE   FUR   TRADERS   AND   COMPANIES 

great  fortunes  which  later  were  conspicuous  in  banks,  steam- 
boats, railroads,  and  other  capitalist  channels.  When,  for 
instance,  Simon  McTavish,  one  of  the  heads  of  that  Company, 
died  in  1804,  his  fortune  was  estimated  at  £126,000  sterling, 
"  an  immense  sum  in  those  days,"  says  a  biographer.31 

31  Borthwick's  History  of  Montreal,  pp.  213-214.  "  The  possession  of 
$25,000  in  those  days,"  says  Borthwick  earlier  in  his  work  (p.  55), 
"  made  a  rich  man,  and  $100,000  a  very  wealthy  man." 


CHAPTER  V 
THE  LANDED  AND  MERCANTILE  OLIGARCHY 

After  the  British  conquest  of  Canada  many  of  the  old 
French  seignories  became  the  property  of  English,  Scotch  and 
Canadian  military  officers  or  merchants  or  of  Canadian  poli- 
ticians. 

In  1765,  General  James  Murray,  Governor,  bought  from 
Charest  the  extensive  seignory  of  Lauzon  running  six  leagues 
at  Point  Levy  along  the  St.  Lawrence  River,  and  as  many 
leagues  in  depth,  producing  in  rents  and  feudal  tributes  of 
various  kinds  an  annual  revenue  of  £233:  153  sterling  —  a  rev- 
enue which  Murray  thought  could  be  increased  to  £358:  135 
sterling,  a  year.1  (This  seignory,  or  parts  of  it,  later  be- 
came the  property  of  the  Government  of  the  Province  of 
Canada;  in  Chapter  XI  the  details  are  given  of  a  transaction 
by  which  Prime  Minister  Sir  Francis  Hincks,  James  Mor- 
ris and  other  high  officials  formed  a  syndicate  and  bought 
a  portion  of  this  seignory  from  the  Government  composed 
of  themselves  and  associates;  they  did  this  anticipating  that 
the  completion  of  the  Grand  Trunk  Railway  would  enhance 
its  value.) 

G.  B.  Hamilton  and  others  became  the  seigneurs  of  the 
De  Lery  seignory;  William  Bingham,  seigneur  of  Rigaud; 
Edward  Ellice,  with  a  part  of  the  profits  made  from  the  fur 
trade,  bought  the  seignory  of  Beauharnais ;  and  William  P. 

1  Report  of  the  Work  of  the  Archives  Branch,  Dom.  Gov't,  1910, 
PP-  SJ-SS-  This  seignory  contained  387  families,  and  in  produce 
yielded  to  the  seigneur  about  803  barrels  of  wheat  a  year. 

63 

V 


64  THE   LANDED  AND   MERCANTILE   OLIGARCHY 

Christie  became  the  owner  of  six  seignories  —  the  Lacolle, 
Lery,  Noyan,  Sabrevois,  De  Bleury  and  Repentigny.2  Simon 
McTavish,  whose  fortune  of  £126,000  sterling  came,  as  we 
have  seen,  from  his  North  West  Company  fur  trade,  bought 
the  seignory  of  Terrebonne  for  the  sum  of  £25,000  sterling 
in  1803,  and  there  his  brother-in-law  and  associate,  Hon. 
Roderick  McKenzie,  lived.3  Other  seignories  came  into  pos- 
session of  still  other  English  or  Scotch-Canadian  merchants, 
although  not  a  few  of  the  seignories  still  were  held  by  the 
French  seigneurs. 

These  seignories  not  only  yielded  annual  sums,  considerable 
for  the  time,  in  feudal  tributes  of  various  and  oppressive 
kinds,  but  many  of  them  became  increasingly  valuable  for 
their  timber  resources  and  for  their  privileges  of  hunting  fur- 
bearing  animals. 

A  New  Landed  Class  Created 

Meanwhile,  a  powerful  new  landed  class  was  being  created 
by  fiat  of  the  British  Governors  and  Government.  Under 
the  old  seignorial  tenure,  any  individual  standing  in  well 
with  the  officials  could  secure  large  grants  of  land,  seeing 
that,  according  to  French  law,  he  was  obliged,  nominally  at 
least,  to  concede  land  to  any  settler  who  applied  for  it  in 
good  faith.  The  various  abuses  under  this  custom  to  which 
we  have  referred  were  evasions,  not  results,  of  this  law. 

In   1763  the  British  Government  abolished  the  seignorial 

2  Titles  and  Documents  Relative  to  the  Seignorial  Tenure,  etc.,  Leg- 
islative Assembly,  Quebec,  1851,  p.  175.    The  value  of  seignorial  estates 
owned  and  possessed  by  British  subjects  in  Canada  in  1788  was  esti- 
mated at  £140,000. —  A  Review  of  the  Government  and  Grievances  of 
the  Province  of  Quebec,  etc.  (1788),  p.  88. 

3  Bprthwick's  History  of  Montreal,'  p.  214.    British  property  in  the 
Province  of  Quebec,  including  seignorial  estates  and  the  Indian  trade 
was  estimated,  in  1788,  at  £1,386,023. —  A  Review  of  the  Government 
and  Grievances  of  the  Province  of  Quebec,  etc.  (1788),  p.  88. 


THE   LANDED  AND   MERCANTILE  OLIGARCHY  65 

system  of  land  grants,  and  in  1791  introduced  the  system  of 
so-called  free  grants  and  free  tenure.  It  was  this  Act,  says 
Langelier,  that  "  gave  rise  to  the  plague  of  large  landholders 
which  has  so  greatly  hindered  the  settlement  and  material 
advancement  of  the  Province  [Quebec]/'  He  proceeds  to 
tell  that  under  this  system,  favored  individuals,  with  the  con- 
nivance of  the  Provincial  authorities,  could  obtain  a  whole 
township  and  close  it  to  settlers,  and  how  this  had  been  the 
result  in  a  considerable  portion  of  the  Eastern  Townships. 
"  It  was  under  this  regime  that  the  system  of  township 
leaders  and  associates  originated,  which,  in  less  than  15  years, 
from  1796  to  1809,  gave  1,457,209  acres  of  the  best  Crown 
lands  into  the  possession  of  about  70  persons,  one  of  whom, 
Nicholas  Austin,  obtained  in  1797  a  quantity  of  62,621  acres 
of  land  in  the  township  of  Bolton."  4 

Frauds  in  Obtaining  Large  Estates 

Describing  the  secret  machinery  of  the  system,  Langelier 
says  that,  "  A  person  wishing  to  thus  take  possession  of  a 
portion  of  the  public  domain,  first  came  to  an  understanding 
with  the  members  of  the  Executive  Council  and  the  persons 
occupying  the  highest  positions,  to  secure  their  concurrence 
and  that  of  the  Governor.  He  afterwards  came  to  an  under- 
standing with  a  certain  number  of  individuals,  picked  up  at 
hap-hazard,  to  get  them  to  sign  a  petition  to  the  Governor, 
praying  for  the  granting  of  land  he  desired.  To  compensate 
them  for  this  accommodating  act  on  their  part,  he  paid  his 
associates  a  nominal  sum,  generally  a  guinea,  in  consideration 
of  which  they  at  once  retransferred  their  share  to  him  as  soon 
as  the  letters  patent  were  issued.  Sometimes  one  or  two  of 

4  List  of  Lands  Granted  by  the  Crown  in  the  Province  of  Quebec, 
1763  to  1890,  by  J.  C.  Langelier,  Deputy  Register,  Printed  by  Order  of 
the  Legislature,  Quebec,  1891,  p.  7. 


66  THE    LANDED   AND    MERCANTILE    OLIGARCHY 

the  associates  kept  a  lot  of  100  or  200  acres  on  a  grant  cover- 
ing several  thousands  of  acres,  but  this  was  the  exception, 
not  the  general  rule.  For  that  purpose  stationers  sold  blanks 
for  such  retransfers,  which  forms,  as  shown  in  1821  before 
a  committee  of  the  Legislative  Assembly,  had  been  prepared 
and  drafted  by  the  Attorney  General. 

"  These  frauds  were  committed  with  the  knowledge  of  the 
Executive  Council,  several  of  whose  members  used  this  means 
to  obtain  large  grants  of  public  lands.  Prescott,  one  of  the 
Governors  of  the  time,  wished  to  stop  this  waste  of  the  public 
domain,  but  he  brought  down  upon  himself  the  hatred  of  the 
Executive  Councillors,  who,  headed  by  Judge  Osgood,  man- 
aged to  obtain  his  recall.  Sir  Robert  Shore  Milnes,  Pres- 
cott's  successor,  showed  himself  better  disposed  towards  the 
spoilers  of  the  Crown  domain,  and  to  give  them  a  tangible 
proof  of  his  good  intentions,  he  had  a  grant  given  to  him  of 
48,061  acres  in  the  townships  of .  Compton,  Stanstead  and 
Barnston."  5 

Fur  Merchants  Become  Landed  Proprietors 

As  the  fur  merchants  controlling  the  North  West  Company 
controlled  Milnes  and  the  Executive  Council,  of  which  some 
were  powerful  members,  they,  of  course,  were  foremost  among 
the  beneficiaries  of  land  grants. 

Simon  McTavish  received  a  grant,  in  1802,  of  11,550  acres 
in  the  township  of  Chester;  and  in  the  same  year,  Governor 
Milnes  presented  to  William  M'Gillivray  a  grant  of  11,550 
acres  of  land  in  the  township  of  Inverness.  In  1810  the  El- 
lice  family  obtained  a  grant  of  25,592  acres  in  Godmanchester, 
and  another  grant  of  3,819  acres  in  Hinchinbrooke.  Five 
years  later,  Governor  Lord  Drummond  granted  to  Hon.  John 
Richardson,  29,800  acres  in  Grantham,  and  11,500  acres  to 

&  Ibid.,  pp.  7-8. 


THE   LANDED   AND    MERCANTILE   OLIGARCHY  67 

Hon.  Thomas  Dunn  in  Stukeley.  The  Frobisher  estate  com- 
prised 57,000  acres.6  Langelier  says  that  after  about  1806,  the 
system  of  township  associates  fell  into  disuse,  and  that  there- 
after almost  all  of  the  large  grants  were  made  in  the  name 
of  one  individual  or  of  a  single  family.  Every  person  of 
eminence,  prominence  and  political  influence  —  which  prac- 
tically meant  the  all-dominating  merchant  class  from  which 
even  the  judges  often  came  —  rushed  to  share  in  the  spoils. 
McGill's  possession  comprised  38,000  acres;  Sir  John  Cald- 
well's  estate  amounted  to  35,000  acres.  Judge  Gale  received 
10,000  acres ;  Judges  Pyke  and  Desbarats,  24,000  acres ;  Chief 
Justice  Sewell,  by  purchase,  6,500  acres.  But  it  is  needless 
to  enumerate  further  the  long  and  tedious  list  of  beneficiaries 
set  forth  in  the  records.7  Many  of  the  surveys  of  these 
grants,  as  Commissioner  Butler  later  reported  to  Lord  Dur- 
ham, were  fraudulently  made  and  enlarged. 

"  These  violations  of  the  instructions  of  the  Imperial  Gov- 
ernment which  sequestered  the  best  part  of  the  public  domain 
in  favor  of  a  few  speculators,"  adds  Langelier,  "  were  en- 
couraged by  the  Imperial  Government  itself.  Thus,  of  his 
own  accord,  the  Duke  of  Portland  gave  48,062  acres  to  Sir 
Robert  Shore  Milnes,  and  12,000  acres  to  each  of  the  members 
of  the  Executive  Council  constituting  the  Land  Commission 
which  had  given  all  the  extravagant  and  scandalous  conces- 
sions up  to  that  date.  Milnes  abused  his  position  "  to  enrich 
a  handful  of  favorites "  none  of  whom  took  "  the  slightest 
trouble  to  fulfill  the  conditions  of  settlement  which  were 
nevertheless  in  force  "  so  far  as  the  law  went.8 

6  Ibid.,  pp.   11-12.     See  also  Lord  Durham's  Report,  Imperial  Blue 
Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  63.    Here  it  is  stated 
that  the  Dunn  estate  covered  about  52,000  acres. 

7  See  pp.  15-19,  List  of  Lands  Granted  by  the  Crown  in  the  Province 
of  Quebec,  1763  to  1890,  etc.,  Quebec,  1891.     Further  details  of  the  land 
grants  to  individuals  are  given  in  Chapter  VI  of  this  volume. 

8 1 bid.,  p.  ii. 


68  THE   LANDED  AND   MERCANTILE   OLIGARCHY 

French  Seigneurs  Loose  Their  Hold 

Probably  Milnes  considered  himself  a  paragon  of  modera- 
tion in  the  granting  of  lands,  since  as  early  as  1800  he  informed 
the  Duke  of  Portland  that  there  were  10,000,000  acres  in 
Quebec  at  the  disposal  of  the  Government,  and  that  these 
"  have  actually  been  applied  for."  9 

In  that  long  arid  instructive  communication  to  the  Duke  of 
Portland,  Lieutenant-Governor  Milnes  expressed  great  solici- 
tude lest  the  power  of  the  aristocracy  should  not  be  sustained. 
Any  Constitution  granted  to  Canada,  he  wrote,  "must  rest 
upon  a  due  proportion  being  maintained  between  the  Aris- 
tocracy and  the  Lower  Orders  of  the  People,  without  which 
it  will  become  a  dangerous  weapon  in  the  hands  of  the  latter." 
He  complained  that  "  several  causes  unite  in  daily  lessening 
the  Power  and  Influence  of  the  Aristocratical  Body  in  Lower 
Canada  " —  the  Province  of  Quebec.  Among  these  causes 
he  specified  the  indisposition  of  the  French  seigneurs  "  to  in- 
crease their  Influence  or  improve  their  Fortunes  by  trade." 
"  Hence,"  he  declared,  the  "  Canadian  Gentry  have  nearly  be- 
come extinct." 

Another  cause,  Milnes  wrote,  was  the  overshadowing  in- 
fluence of  the  Roman  Catholic  Church  and  the  independence 
of  the  priests  resting  upon  a  sure  and  solid  revenue-producing 
foundation. 

"The  Priests,"  he  wrote,  "have  (in  tithes)  a  26th  of  all 
the  Grain,  which  may  be  valued  at  £25,000  or  £26,000  a  year, 
which  alone  must  make  their  influence  very  considerable,  and 
especially  as  the  Religious  Bodies  are  in  possession  of  nearly 
One-Fourth  of  all  the  Seignorial  Rights  granted  before  the 
Conquest  (excepting  those  of  the  Jesuit  Estates  lately  taken 
into  possession  of  the  Crown,  as  will  appear  by  the  Inclosure)  : 

9  Rep.  on  Can.  Archives,  1892  Vol.,  Note  B.,  p.  13. 


THE   LANDED   AND   MERCANTILE   OLIGARCHY  69 

there  are  123  parishes  and  120  Parish  Priests." 10  Milnes 
justified  the  giving  of  land  grants  to  Protestants  on  the  ground 
that  it  would,  in  time,  if  judiciously  done,  "  form  in  this 
Province  a  body  of  people  of  the  Protestant  Religion  that 
will  naturally  feel  themselves  more  intimately  connected  with 
the  English  Government." 

The  Commanding  "  Shopkeeper  Aristocracy  " 

The  dominant  class  at  this  time  in  Quebec  and  Ontario 
were  the  mercantile  and  shipping  merchants  —  what  Judge 
Thorpe,  in  1806,  described  as  the  "  shopkeeper  aristocracy." 
Writing  from  York  (now  Toronto),  December  I,  1806,  to 
Sir  George  Shee,  Judge  Thorpe  said  that  this  shopkeeper 
aristocracy,  "  with  great  interest  in  England,  composed  of 
Scotch  pedlars  "  who  had  so  long  insinuated  themselves  into 
favor  with  General  Hunter  and  who  had  so  long  irritated 
and  oppressed  the  people,  were  surrounding  the  new  Lieu- 
tenant-Governor.  There  was  a  chain  of  them,  he  said,  linked 
from  Halifax  to  Quebec,  Montreal,  York,  Kingston,  Niagara 
and  on  to  Detroit.  The  system  pursued  was  to  "  get  as  many 
dollars  as  you  can  for  [from]  the  Governor  by  land,"  and 
after  themselves,  their  families  and  friends  were  favored  with 
unbounded  tracts  of  land  in  the  finest  situations,  at  what- 
ever fees  they  chose  to  give.11 

In  the  next  year  Judge  Thorpe  wrote  in  the  same  indignant 
strain  to  Sir  George  Shee  complaining  of  being  "  surrounded 

10  Report  on  Canadian  Archives,  1892  Vol.,  pp.  9-11.     Milnes  stated 
that  the  priests  did  not  consider   themselves  amenable  to  any  other 
power  than  the  Catholic  Bishop.    The  population  of  Lower  Canada  or 
Quebec  at  this  time  was  160,000,  largely  Roman  Catholic. 

11  Report  on  Canadian  Archives,  1892  Vol.,  Note  D.,  p.  57.    "  Those," 
wrote  Judge  Thorpe,  "  whom  '  the  Family  Compact '  could  not  intimi- 
date or  frustrate  in  demands  for  land  were  sent  to  a  distance  in  the 
wilderness,  while  favorites  and  complying  members  of  the  House  of 
Assembly  were  granted  large  and  convenient  tracts." — Ibid.,  p.  106. 


7O  THE    LANDED    AND    MERCANTILE   OLIGARCHY 

by  the  vilest  miscreants  on  earth,  who  have  gorged  themselves 
on  the  plunder  of  every  Department,  and  squeezed  every 
dollar  out  of  the  wretched  inhabitants." 

Denouncing  this  shopkeeper  aristocracy,  as  he  termed  it, 
Judge  Thorpe  was  elected  to  the  Ontario  House  of  Assembly 
under  the  express  promise  that  he  would  expose  the  flagrant 
abuses,  land  granting  and  other  grievances,  one  of  which  com- 
plaints appears  to  have  been  the  charge  that  the  subservient 
members  of  the  Assembly  all  were  bribed  with  donations  of 
public  land.12 

As  the  head  of  this  discontented  popular  party,  Judge 
Thorpe  charged  that  the  Governor  was  surrounded  by  a  few 
half  pay  captains,  "men  of  the  lowest  origin,"  and  that  he 
was  directed  by  a  half  dozen  storekeepers  "  men  who  have 
amassed  wealth  by  the  plunder  of  England,  by  the  Indian  De- 
partment and  every  other  useless  Department,  by  a  Monopoly 
of  Trade  and  extortion  on  the  people;  this  shopkeeper  aris- 
tocracy who  are  linked  from  Halifax  to  the  Mississippi,13  boast 
that  their  interest  is  so  great  in  England  that  they  made  Mr. 
Scott  (their  old  Attorney)  Chief  Justice  by  their  advocate 
Sir  William  Grant,  that  they  will  keep  Lt.  Governor  Gore  in 
his  place,  drive  me  away,  and  hold  the  people  in  subjec- 
tion." 14 

Further  remonstrances  written  by  Judge  Thorpe  contained 
more  references  to  the  extensive  ramifications  of  the  "  shop- 
keeper aristocracy  "  and  the  power  it  unscrupulously  wielded 
throughout  Canada. 

12  Ibid.,  pp.  97  and  101. 

13  Up  to  1805,  the  North  West  Company  had  95  men  stationed  in 
the  territory  of   the  United   States.     To  put  a   stop  to  this   trade  a 
proclamation  was  issued  by  the  United  States  Government,  August  25, 
1805,    forbidding   traders,   canoemen    and   others,   not   citizens    of   the 
United  States,  from  pursuing  their  traffic  on  the  Missouri  River. 

14  Report  on  Canadian  Archives,  1892  Vol.,  Note  D.,  p.  98.     Complaint 
of  the  popular  grievances,  Judge  Thorpe  insisted,  was  prevented  from 
being  sent  to  England  "  because  the  members  of  the  House  of  Assem- 
bly were  bribed  with  Crown  Lands." —  Ibid.,  p.  101. 


THE   LANDED   AND    MERCANTILE   OLIGARCHY  7! 


Land  Jobbing  and  Corruption 

Judge  Thorpe  also  charged  that  the  public  lands  were  bar- 
tered openly  for  private  emolument  and  public  corruption; 
that  public  money  was  not  accounted  for;  that  the  people 
concluded  that  it  was  embezzled  by  the  officials  when  they 
heard  that  General  Hunter  had  sent  nearly  £30,000  to  Eng- 
land ;  and  that  the  "  shopkeeper  aristocracy,  who  rule  British 
North  America  with  a  rod  of  iron,  a  voracious  set,"  were  an 
all-powerful  clique  who  not  only  made  the  laws  but  they  were 
"  universally  the  Magistrates  and  enforce  the  demands  of 
each  other." 15  Judge  Thorpe  added  that  he  was  satisfied 
that  his  opposition  to  the  illegality  of  fees,  the  land  jobbing, 
and  the  arbitrary  system  in  force,  and  his  exposure  of  other 
abuses  had  raised  against  him  a  host  of  foes,  which  was  true 
enough 

Accusing  Thorpe  of  being  a  "  factious  demagogue,"  the 
traders  and  officials  sought  in  every  possible  way  to  intimidate, 
harass  and  discredit  him,  even  degenerating  into  such  petty 
meannesses  (as  he  charged)  as  to  open  his  letters  and  to  cheat 
him  of  part  of  his  salary. 

The  popular  backing  that  Judge  Thorpe  received  was  not 
one  of  sentimental  agitation  or  emotional  indignation ;  it  arose 
from  the  definite  and  well-understood  material  interests  of 
a  considerable  body  of  settlers  who,  seeing  the  abundant 
natural  resources  about  them,  wanted  a  free  hand  in  develop- 
ing the  fur,  hemp,  flour  and  lumber  trade  and  a  command 
of  resources  with  which  to  engage  in  manufacturing.16  In 

15  Thorpe  to  the  Secretary  of  State,  August  14,  1807.—  Ibid.,  pp.  105- 
106. 

16  Ibid.,  p.  101.    Also  in  his  letter  to  the  Secretary  of  State,  August 
14,  1807,  Judge  Thorpe,  after  telling  of  the  persecutions  and  calumnies 
to  which  he  had  been  subjected  by  those  whom  he  had  exposed  and  op- 
posed, went  on  to  say,  "  I  strove  to  cherish  what  was  in  infancy,  Fur, 
Flour  and  Potash,  and  to  bring  forth  what  was  in  Embryo,  Iron,  Hemp 
and  Lumber,"  etc.,  etc. —  Ibid.,  p.  105. 


72  THE   LANDED   AND   MERCANTILE   OLIGARCHY 

other  words,  it  was  the  beginning  of  the  rebellion  of  the 
germinating  capitalist  manufacturing  class  —  an  abortive 
movement  that,  although  then  ending  in  the  dismissal  of  Judge 
Thorpe,  subsequently  broke  out  afresh  and  culminated  in  the 
rebellion  of  1837-1838,  led  by  William  Lyon  Mackenzie  in 
Ontario  and  by  Papineau  in  Quebec. 

It  is,  however,  by  turning  to  the  exhaustive  and  conscien- 
tious report  of  1839  by  Lord  Durham,  after  his  appointment 
as  High  Commissioner  and  Governor-General  of  Canada,  that 
we  get  a  comprehensive  knowledge  of  the  circumstances  under 
which  tens  of  millions  of  acres  of  the  best  lands  in  Quebec, 
Nova  Scotia,  Ontario,  Prince  Edward  Island  and  other  parts 
of  Canada  were  made  during  these  decades  to  individuals, 
to  the  Protestant  Church,  or  to  the  great  land  companies  owned 
and  controlled  by  absentee  landlords  luxuriating  in  England. 

Immensity  of  the  Land  Grabbing 

Lord  Durham  reported  that  of  about  17,000,000  acres  com- 
prised within  the  surveyed  districts  of  Upper  Canada  (On- 
tario), less  than  1,600,000  were  unappropriated  by  1838,  and 
this  1,600,000  acres  included  450,000  acres  constituting  the 
reserve  for  roads.  This  left  less  than  1,200,000  acres  open 
to  grant;  and  of  this  remnant,  500,000  acres  were  required 
to  satisfy  claims  for  grants  founded  on  pledges  given  by  the 
Government.  The  remaining  700,000  acres,  in  the  opinion 
of  Acting  Surveyor-General  Rodenhurst,  consisted,  for  the 
most  part,  of  land  inferior  in  position  or  quality.  "  It  may 
be  said,  therefore,"  concluded  Lord  Durham  as  to  Ontario, 
"that  the  whole  of  the  public  lands  in  Upper  Canada  have 
been  alienated  by  the  Government."  17 

In  Lower  Canada  (Quebec)  of  the  6,169,693  acres  in  the 
surveyed  townships,  nearly  4,000,000  acres  had  been  granted 

17  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  77. 


THE   LANDED   AND   MERCANTILE   OLIGARCHY  73 

or  sold ;  and  there  were  "  unsatisfied  but  indisputable  claims  " 
for  grants  to  the  extent  of  nearly  500,000  acres."  18 

As  for  Nova  Scotia,  nearly  6,000,000  acres  had  already  been 
granted,  and  in  the  opinion  of  the  Surveyor-General  only  about 
one-eighth  of  the  land,  or  300,000  acres  remaining  to  the 
Crown,  was  available  for  the  purposes  of  settlement.19 

The  whole  of  Prince  Edward  Island,  about  1,400,000  acres, 
Lord  Durham  reported  further,  was  alienated  in  one  day.20 

In  New  Brunswick,  4,400,000  acres  had  been  granted  or 
sold,  leaving  to  the  Crown  about  11,000,000  acres,  of  which 
5,500,000  acres  were  considered  fit  for  settlement.21 

Protestant  Clergy  Get  3,000,000  Acres 

To  whom,  and  under  what  conditions,  were  given  these 
great  areas  of  land  thus  alienated  from  public  ownership? 
Lord  Durham  went  into  this  phase  of  the  subject  at  length. 
Of  the  lands  granted  in  Upper  and  Lower  Canada  —  that  is  to 
say,  in  the  Provinces  of  Ontario  and  Quebec, —  fully  3,000,000 
acres  were  granted  for  the  support  of  the  Protestant  clergy. 
Much  of  these  lands  were  obtained,  it  would  appear,  by  irregu- 
lar methods. 

The  Church  of  England  clergy  had  long  been  scheming  to 
put  itself  upon  the  same  solid  economic  footing  as  the  Roman 
Catholic  Church,  with  its  enormous  land  holdings.  "  Com- 
pared," wrote  the  Anglican  Bishop  of  Quebec  to  Lieutenant- 
Governor  Milnes,  June  6,  1803,  "  with  the  respectable  Estab- 
lishments, the  substantial  Revenues,  and  the  intensive  power 
of  the  Church  of  Rome,  the  Church  of  England  sinks  into  a 

is  Ibid. 

10  Ibid.  Nova  Scotia  had  been  ceded  by  the  French  in  1713,  and  it 
was  long  a  debatable  question  whether  New  Brunswick  was  included  in 
the  cession. 

20  Ibid. 

21  Ibid. 


74  THE   LANDED   AND   MERCANTILE  OLIGARCHY 

merely  tolerated  Sect;  possessing  at  the  present  moment  not 
one  shilling  of  Revenue  which  it  can  properly  call  its 
own  .  .  ,"22 

But  already  a  system  of  clergy  reserves, —  as  the  land 
grants  were  called, —  had  been  established  by  an  Act  passed 
in  1791  which  directed  that  in  all  grants  made  by  the  Govern- 
ment, a  quantity  of  land  equal  to  one-seventh  of  the  land  so 
granted  should  be  reserved  for  the  clergy.  These  clergy 
grants  were  generally  lots  of  200  acres  each,  scattered  at 
regular  spaces  over  the  entire  territory  of  all  of  the  townships. 
Even  this  extraordinarily  liberal  donation  was  accompanied, 
it  was  shown,  by  the  most  glaring  frauds  by  which  the  clergy 
benefited. 

"  A  quantity  equal  to  one-seventh  of  all  grants,"  Lord  Dur- 
ham reported,  "  would  be  one-eighth  of  each  township  or  of 
all  of  the  public  land.  Instead  of  this  proportion  the  prac- 
tice has  been,  ever  since  the  Act  was  passed,  and  in  the  clear- 
est violation  of  its  provisions,  to  set  apart  for  the  clergy  of 
Upper  Canada  a  seventh  of  all  of  the  land  which  is  a  quantity 
equal  to  a  sixth  of  the  land  granted. 

Illegally  Get  an  Excess  of  527,559  Acres 

"  There  have  been  appropriated  for  this  purpose  300,000 
acres  which,  legally  it  is  manifest,  belong  to  the  public.  And 
of  the  amount  for  which  clergy  reserves  have  been  sold  in 
that  Province,  namely  £317,000  (of  which  about  £100,000 
have  already  been  received  and  invested  in  the  English  funds) 
the  sum,  of  about  £45,000  should  belong  to  the  public."  : 

22  Report  on  Canadian  Archives,  1892  Vol.,  Note  C.    "  Ecclesiastical 
Affairs  in  Lower  Canada,"  p.  17. 

23  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  78. 
Previous   to   1827  the   lands   reserved   for  the  benefit  of  the  Church 
could  only  be  leased,  not  sold,  but  an  Act  passed  that  year  gave  power 
to  sell  one-quarter  of  the  land,  and  not  more  than  100,000  acres  a  year. 


THE   LANDED   AND   MERCANTILE   OLIGARCHY  75 

But  this  extensive  irregularity  in  land  grants  for  the  benefit 
of  the  clergy  of  great  areas  of  the  public  domain  was  by  no 
means  confined  to  Upper  Canada.  "  In  Lower  Canada " 
[Province  of  Quebec]  Lord  Durham's  report  continued,  "the 
same  violation  of  the  law  has  taken  place,  with  this  difference 
-  that  upon  every  sale  of  Crown  and  clergy  reserves,  a  fresh 
reserve  for  the  clergy  has  been  made  equal  to  a  fifth  of  such  re- 
serves. The  result  has  been  the  appropriation  for  the  clergy 
of  673,567  acres,  instead  of  446,000,  being  an  excess  of  227,559 
acres,  or  half  as  much  again  as  they  ought  to  have  received. 

:'  The  Lower  Canada  fund  already  produced  by  sales 
amounts  to  £50,000,  of  which,  therefore,  a  third,  or  about 
£16,000,  belong  to  the  public." 

"  If,  without  any  reform  of  this  abuse,  the  whole  of  the 
unsold  clergy  reserves  in  both  provinces  should  fetch  the  aver- 
age price  at  which  such  lands  have  hitherto  sold,  the  public 
would  be  wronged  to  the  amount  of  about  £280,000;  and  the 
reform  of  this  abuse  will  produce  a  certain  and  almost  im- 
mediate gain  to  the  public  of  £60,000."  24 

Having  thus  exposed  these  flagrant  frauds,  Lord  Durham, 
probably  to  avoid  the  appearance  of  being  too  severe  upon 
the  all-powerful  clergy,  allowed  them  the  grace  of  his  miti- 
gating comment  that  "  the  clergy  have  had  no  part  in  this 
great  misappropriation  of  the  public  property,  but  that  it  has 
arisen  from  needless  misconception,  or  some  other  error  of 
the  civil  Government  of  both  Provinces." 

But  the  documents  of  the  time  go  to  show  that  not  only 
were  the  clergy  fully  aware  of  the  frauds  perpetrated  for 
their  benefit,  but  that  high  Episcopal  prelates,  such  as  Bishop 
Mountain  of  Quebec  and  Bishop  Strachan  of  Toronto,  ob- 
tained large  land  grants  for  themselves  individually.  There 
is  not  a  scrap  of  evidence  that  the  clergy  ever  called  attention 

24  Ibid.,  p.  78.  Lord  Durham's  surprisingly  penetrating  and  compre- 
hensive investigation  and  report  followed  the  rebellion  of  1837. 


76  THE   LANDED  AND   MERCANTILE  OLIGARCHY 

to  the  excess  land  that  they  thus  fraudulently  or  erroneously 
acquired  or  sought  to  restore  it;  they  maintained  a  dis- 
creet silence,  taking  with  a  serene  conscience  all  the  land 
and  funds  that  came  their  way,  and  subsequently,  as  we  shall 
see,  protested  vigorously  when  an  attempt  was  made  to  com- 
pel forfeiture  or  restitution. 

Crown  Lands  Commissioner  Dismissed  for  Corruption 

Moreover,  the  Upper  Canada  Crown  Commissioner  of 
Lands  conducting  the  disposition  and  sale  of  certain  of  the 
clergy  reserves  and  other  lands  during  a  considerable  part  of 
this  time  was  William  B.  Felton  who  later — in  1836  —  was 
impeached  by  the  Quebec  House  of  Assembly  for  fraud,  cor- 
ruption, oppression,  peculation  and  extortion,  and  dismissed 
from  office.25  The  House  of  Assembly  standing  committee 
reported  that  he  had  "  corruptly  and  fraudulently  "  received 
large  sums  of  money  from  settlers  by  representing  that  he 
was  the  proprietor  of  a  great  extent  of  land  which  was  really 
public  land  that  the  settlers  should  have  received  gratuitously, 
and  that  Felton  had  caused  to  be  fraudulently  granted  to  him- 
self and  members  of  his  family  much  of  a  total  of  31,475 
acres.28 

Different  Sects  Squabble 

At  first  intended  exclusively  for  the  Church  of  England  in 
Canada,  certain  of  the  proceeds  from  the  sale  of  clergy  re- 
serves eventually  had  to  be  apportioned  among  other  Protes- 
tant creeds,  so  vociferous  and  insistent  an  outcry  did  the  clergy 
of  the  other  denominations  make  to  have  their  recognized 
share  in  the  distribution  of  the  bountiful  spoils. 

25  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  No.  VII, 
pp.  141-142.     Also  Report  on  Canadian  Archives,  1899  Vol.,  pp.  930-932 
and  1064. 

26  Imperial  Blue  Books,  etc.,  Vol.  No.  VII,  p.  142. 


THE  LANDED  AND  MERCANTILE  OLIGARCHY  77 

The  Presbyterian  clergy,  in  1820,  had  demanded  that  they 
be  given  their  s>hare.  They  pointed  out  that  the  Roman 
Catholic  clergy  and  the  Episcopal,  or  Church  of  England, 
clergy  were  already  well  provided  for,  and  that  the  State  should 
come  promptly  to  their  assistance.27  The  Methodists  made 
the  same  demand. 

Indisposed  to  yield  even  a  portion  of  the  largess  to  these 
denominations,  the  Episcopal  clergy  made  a  bitter  opposition. 
But  the  other  denominations  gained  the  favorable  ear  of  a 
select  committee  of  the  Ontario  House  of  Assembly,  in  1828. 
This  committee  rebuked  Bishop  Strachan  for  his  insinuations 
against  the  Methodists,  and  pointed  out  that,  apart  from  the 
clergy  reserves,  the  Church  of  England  always  had  peculiar 
advantages  in  Ontario.  "  It  has  been  the  religion  of  those 
high  in  office  and  had  been  supported  by  their  influence  and 
countenanced  more  than  any  other  church  by  favor  of  the 
Executive  Government.  Its  clergymen  have  had  the  exclu- 
sive right  of  marrying  persons  of  all  denominations  indis- 
criminately," etc.,  etc.28  The  committee  further  dilated  upon 
the  enormous  gift  of  225,994  acres  of  the  public  lands  and 
an  additional  £1,000  a  year  for  16  years,  that  had  been  granted 
to  King's  College,  controlled  absolutely  by  the  Church  of 
England  clergy  with  Bishop  Strachan  at  their  head. 

Although  the  clergy  of  the  various  Protestant  denomina- 
tions made  a  great  noise,  and  were  able  by  reason  of  their 
influence  and  compact  organization  to  arrange  meetings  and 
concoct  petitions,  there  was  a  comparatively  immense  body  of 
men,  including  those  of  their  own  creed,  antagonistic  to  their 
land-grabbing  projects.  Church  of  England  clergy  completely 
forgot  their  39  articles  of  creed  in  order  to  fight  to  hold  the 
clergy  reserves  exclusively,  and  keep  the  Methodists  and 
Presbyterians  from  having  any  part  of  those  blessed  pre- 

27  Report  on  Canadian  Archives,  1899  Vol.,  Note  A.,  Clergy  Reserves. 
.,  pp.  6,  7,  etc. 


78  THE   LANDED   AND   MERCANTILE   OLIGARCHY 

serves.     In  turn,  Methodists  and  Presbyterians  fought  back 
energetically. 


The  Landed  Proprietors  Enter  the  Contest 

Another  aggressive  element  now  entered  the  contest.  This 
was  the  individual  "  Landed  Proprietors  " —  men  who  had  got 
together  immense  estates  in  various  sections,  and  who  wanted 
the  Government  to  spend  large  sums  building  a  system  of 
roads,  so  that  their  estates  could  be  made  accessible,  and 
lumber  and  produce  hauled. 

These  proprietors  cared  nothing  about  the  39  sacred  ar- 
ticles when  they  conflicted  with  roads,  and  in  this  view  they 
were  supported  by  the  mass  of  settlers  who  were  intensely 
exasperated  that  so  inordinate  a  part  of  the  best  lands,  re- 
served for  the  clergy,  should  have  been  thus  withdrawn  from 
settlement  entry  to  lie  uncultivated  for  years.  A  petition, 
signed  by  more  than  10,000  Ontario  settlers,29  was  sent  to  the 
British  House  of  Commons  in  1831.  From  this  petition,  a 
pointed  and  voluminous  one,  some  extracts  only  can  be  quoted 
here. 

Demanding  that  the  proceeds  from  the  sale  of  clergy  re- 
serves be  applied  to  the  purposes  of  general  education  and 
various  internal  improvements,  the  petition  declared  that  "  any 
kind  of  ecclesiastical  establishment,  situated  as  this  province 
is,  is  essentially  anti-christian  and  baneful  to  every  interest  of 
humanity."  The  Church  of  England,  the  petition  asserted, 
was  really  in  the  minority.  Yet  the  enormous  land  grants  given 
as  clergy  reserves  were  controlled  by  a  body  of  between  50 
and  60  Church  of  England  clergy  not  responsible  to  anyone. 

These  clergy,  the  petition  charged,  were  intent  upon  avoid- 
ing public  investigation,  and  committed  to  private  and  secret 

29  Considering  the  population  of  Upper  Canada  at  that  time  —  400,000 
—  this  number  of  signatures  was  proportionately  very  considerable. 


THE   LANDED   AND   MERCANTILE   OLIGARCHY  79 

measures  to  bring  about  their  ends.  "  The  Clergy  reserve 
lands  of  this  Province,"  the  petition  read  on,  "  have  been 
brought  from  a  nominal  to  a  real  and  rapidly  increasing  value 
by  the  labor,  industry  and  enterprise  of  the  population  gener- 
ally; and  to  appropriate  the  avails  of  these  lands  to  the  sup- 
port of  the  clergy  of  a  minor  church  or  churches,  will  be  con- 
verting the  labors  of  the  many  to  the  undeserved  aggrandize- 
ment of  a  few."  30 

Holding  the  high  political  offices  in  Canada,  the  Church 
of  England  or  Episcopal  men  treated  such  petitions  dis- 
dainfully. Just  before  quitting  office,  in  1835,  Sir  John  Col- 
borne  established  57  rectories  for  the  benefit  of  the  Church 
of  England  —  an  act  that,  according  to  Lord  Durham,  was 
bitterly  resented  by  Methodists,  Presbyterians  and  Irish 
Roman  Catholics.31 

The  contest  was  a  long  and  acrimonious  one,  but  the  reve- 
nues of  the  clergy  reserves  could  not  be  loosened  from  the 
hold  of  the  ecclesiastics.  In  the  end  the  Presbyterians  and 
Methodists  accomplished  their  purpose,  although  their  share 
of  the  proceeds  was  not  nearly  as  large  as  that  of  the  Church 
of  England.  The  amounts  named  in  Lord  Durham's  report 
as  paid  to  the  clergy  from  the  sale  of  the  reserves  were  only 
those  paid  up  to  1838;  the  total  amounts,  it  may  here  be 
remarked,  paid  to  the  clergy  of  the  various  denominations, 
from  1814  to  after  the  final  settlement,  subsequent  to  the 
abolition  of  the  clergy  reserves  in  1854,  were  $3,843,997  — 
an  impressive,  even  formidable  sum  for  those  times,32  and 
constituting  the  chief  foundation  on  which  the  economic 
power  of  the  Protestant  churches  was  erected. 

30  Report  on  Canadian  Archives,  1899  Vol.,  Note  A.,  "  Petition  Re- 
specting Clergy  Reserves." 

31  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  66 

32  The   specific   sums   paid   to   each   denomination   are   set   forth   in 
Chapter  VII  of  this  volume. 


CHAPTER  VI 
THE  LANDED  PROPRIETORS 

During  this  period  Canada  was  dominated  by  what  was 
popularly  called  the  "  Family  Compact," —  a  term  that  might 
be  supposed  to  describe  a  clique  joined  and  inter  joined  by 
ties  of  family  relationships.  Lord  Durham,  however,  did 
not  find  the  term  a  very  appropriate  one,  considering  that 
there  was  very  little  of  family  connection  among  the  offi- 
cials, functionaries  and  other  individuals  thus  united. 

Composition  of  "The  Family  Compact" 

"  For  a  long  time,"  Lord  Durham  reported,  "  this  body  of 
men,  receiving  at  times  accessions  to  its  numbers,  possessed 
almost  all  the  highest  public  offices,  by  means  of  which,  and 
of  its  influence  in  the  Executive  Council,  it  wielded  all  the 
powers  of  Government.  .  .  .  Successive  Governors,  as  they 
came  in  their  turn,  are  said  to  have  submitted  quietly  to  its 
influence,  or,  after  a  short  and  unavailing  struggle,  to  have 
yielded  to  this  well-organized  party  the  real  conduct  of  af- 
fairs. 

"  The  bench,  the  magistracy,  the  high  offices  of  the  Epis- 
copal Church,  and  a  great  part  of  the  legal  profession,  are 
filled  by  the  adherents  of  this  party:  by  grant  or  purchase, 
they  have  acquired  nearly  the  whole  of  the  waste  lands  of 
the  Province;  they  are  all-powerful  in  the  chartered  banks, 
and  till  lately,  shared  among  themselves  almost  exclusively 
all  offices  of  trust  and  profit.  The  bulk  of  this  party  con- 
So 


THE   LANDED   PROPRIETORS  8l 

sists,  for  the  most  part,  of  native-born  inhabitants  of  the  col- 
ony, or  of  emigrants  who  settled  in  it  before  the  last  war 
with  the  United  States;  the  principal  members  of  it  belong 
to  the  Church  of  England,  and  the  maintenance  of  the  claims 
of  that  Church  has  always  been  one  of  its  most  distinguishing 
characteristics."  1 

"  The  Family  Compact "  in  Nova  Scotia,  however,  seems 
to  have  been,  as  it  were,  much  in  the  family.  Two  family 
connections  comprehended  five  of  the  members  of  the  Ex- 
ecutive Council  of  that  Province ;  and  until  almost  1837,  when 
two  of  them  retired  from  the  firm,  five  were  co-partners 
in  one  banking  house.2 

Lavish  Distribution  of  Land  in  Ontario 

The  granting  of  vast  acres  of  land  to  ecclesiastics  was 
only  one  of  sundry  effective  ways  of  giving  'away  territory. 
Another  of  the  methods  was  granting  lands  for  so-called 
"  public  services  "•  —  a  form  that  in  both  Quebec  and  Ontario, 
Lord  Durham  reported,  had  been  carried  on  with  reckless 
prodigality,  in  violation  of  instructions  from  the  Secretary 
of  State.3 

In  Upper  Canada  3,200,000  acres  had  been  given  to  what 
were  called  "  United  Empire  Loyalists  "  or  to  their  children ; 
these  loyalists  were  refugees  from  the  United  States  who  had 
settled  in  Ontario  before  1787.  Many  of  their  descendants, 
it  may  be  here  commented,  are  today  living  in  affluence  upon 
the  increment  of  the  land  then  given,  especially  in  Toronto.  To 
militiamen,  730,000  acres  were  given.  Discharged  soldiers 
and  sailors  received  450,000  acres.  Grants  totaling  255,000 

1  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  53. 

2  Address  of  Nova  Scotia  Assembly  to  the  Crown,  April  13,  1837, 
Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  A.,  "Confi- 
dential," 1828-1837,  Appendix,  p.  30. 

s  Ibid.,  p.  78. 


82  THE   LANDED   PROPRIETORS 

acres  were  distributed  among  magistrates  and  barristers.  To 
executive  councillors  and  their  families  136,000  acres  were 
donated. 

Five  legislative  councillors  and  their  families  received  50,- 
ooo  acres.  To  a  handful  of  powerful  clergymen,  36,900  acres 
were  given  as  their  personal  private  property.  Titles  to  a 
lump  of  264,000  acres  were  handed  over  to  persons  contract- 
ing to  make  surveys.  Certain  officers  of  the  army  and  navy 
received  92,526  acres.  For  the  endowment  of  schools,  50,000 
acres  were  set  aside.4 

To  one  individual,  Col.  Talbot,  48,520  acres  were  given; 
to  the  heirs  of  General  Brock,  12,000  acres,  and  another  12,- 
ooo  acres  were  presented  to  Dr.  Mountain,  formerly  Angli- 
can Bishop  of  Quebec.5 

Added  to  the  clergy  reserves,  these  land  grants,  Lord  Dur- 
ham reported,  comprised  nearly  half  of  all  of  the  surveyed  land 
in  the  Province.6 

The  Same  Prodigality  in  the  Province  of  Quebec. 

In  Lower  Canada,  otherwise  the  Province  of  Quebec,  the 
land  grants  (exclusive  of  those  to  refugee  loyalists,  as  to  the 
amount  of  which  the  Crown  Lands  Department  could  not 

*Ibid.,  pp.  7&-7Q. 

a  Ibid. 

6  In  his  Reminiscences,  Charles  Durand,  barrister  of  Toronto,  wrote 
that  the  leading  people  in  Ontario  "  were  land  grabbers  and  were 
scions,  or  principals  of  the  Family  Compact,  and  the  worst  of  them  was 
Dr.  James  Strachan,"  Bishop  of  the  Episcopal  Church  and  one  of  the 
three  members  of  the  Executive  Council  of  Ontario.  "  They  wanted  to 
get  as  much  land  as  they  could,  keep  it  for  a  rise,  let  others  settle 
around  it,  and  increase  the  value  of  the  vacant  land  monopolized; 
and  then,  of  course,  make  their  fortunes."  When,  in  1827,  Francis 
Collins,  publisher  of  The  Freeman  at  York,  criticised  the  official 
aristocracy  of  York,  and  referred  to  John  Beverley  Robinson,  then 
Attorney-General  of  Upper  Canada,  as  "  His  native  malignity,"  Robin- 
son (Durand  says)  caused  Collins  to  be  indicted  and  tried  for  criminal 
libel,  and  Collins  was  fined  heavily  and  sentenced  to  imprisonment. 
"This  severity  caused  great  sensation  and  clamor." 


THE   LANDED   PROPRIETORS  83 

give  any  information  to  Lord  Durham)  were:  450,000  acres 
granted  to  militiamen ;  72,000  acres  to  executive  councillors ; 
48,000  acres  to  Governor  Milnes ;  100,000  acres  to  Mr.  Gush- 
ing and  to  another  "  as  a  reward  for  giving  information  in  a 
case  of  high  treason  " ;  to  officers  and  soldiers  200,000  acres ; 
and  to  "  leaders  of  townships  "  1,457,209  acres. 

These  totals,  added  to  the  clergy  reserves,  made  altogether 
somewhat  more  than  half  of  the  surveyed  lands  originally  at 
the  disposal  of  the  Crown.7  Less  than  a  tenth  of  the  land 
granted  in  the  province  of  Ontario  had  been,  up  to  1837,  oc- 
cupied by  settlers,  much  less  reclaimed  and  cultivated ;  and  in 
the  Province  of  Quebec  nineteen-twentieths  of  the  grants  (ex- 
cepting a  few  townships  on  the  American  border)  were  still 
unsettled  and  in  a  primitive,  wild  state.8  The  lands  were 
simply  held  pending  the  time  that  they  could  be  sold  at  a 
large  profit. 

Governing  Officials  as  Land  Speculators 

Most  of  the  lands  granted  to  the  "  loyalists  "  and  their 
children  were  sold  by  them  for  trifles  to  speculating  officials. 
The  price  for  200  acres  was  variously  from  a  gallon  of  rum 
to  six  pounds, —  seldom  the  latter. 

Among  the  extensive  purchasers  of  these  lands  were  Mr. 
Hamilton,  a  member  of  the  Legislative  Council,  who  bought 
about  100,000  acres;  Chief  Justices  Emslie  and  Powell,  and 
Solicitor-General  Grey,  who  bought  from  20,000  to  50,000 
acres  (each?)  ;  and  many  other  members  of  the  Executive 
and  Legislative  Councils,  as  well  as  of  the  House  of  Assembly, 
were  "  very  large  purchasers."  9  As  to  the  militiamen's  land 
grants,  Lord  Durham  reported  that  they  were  often  disposed 

7  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  pp.  78- 
79- 

8/fott,  p.  79. 
» Ibid. 


84  THE   LANDED   PROPRIETORS 

of  for  a  mere  trifle  to  land  speculators  who  never  settled.10 
The  fraudulent  means  by  which  the  "  Leaders  and  Asso- 
ciates "  in  Lower  Canada  obtained  1,457,209  acres  were  de- 
scribed by  Lord  Durham  at  length.11 

Of  the  large  landed  proprietors  in  Lower  Canada,  many 
were  absentees;  in  fact,  219,700  acres  were  owned  by  ab- 
sentee proprietors.  The  remaining  proprietors  lived  generally 
in  the  cities  of  Montreal,  Quebec  and  Three  Rivers,  "  and 
were  men  of  affluence  and  of  the  most  influential  class."  12 


Almost  All  of  P.  E.  I.  Given  Away  on  One  Day 

The  1,400,000  acres  of  remarkably  potential  rich  agricul- 
tural soil  on  Prince  Edward  Island  given  away  to  a  handful 
of  individuals  was  a  striking  instance  of  the  land  jobbing 
carried  on  with  such  flagrant  and  arbitrary  high-handedness. 

Nearly  the  whole  of  this  island  was  alienated  in  a  single 
day;  and  the  grantees  were  mostly  absentees  living  in  Great 
Britain.13  Sir  James  Montgomery  and  Sons  owned  several 
townships.  Lord  Selkirk,  Lord  Westmorland,  the  heirs  of 
John  Cambridge,  Rev.  J.  Macdonnell,  Sir  J.  F.  Seymour  and 
others  all  owned  large  landed  properties.14  While  in  the  of- 
fice of  Provincial  Treasurer,  Thomas  Haviland  (as  he  testi- 
fied himself)  acted  as  the  resident  agent  for  the  properties  of 
Seymour  and  another  large  absentee  landlord.15 

These  grants  were  made  upon  certain  conditions,  one  of 


rf.,  p.  81. 

11  Ibid.,  pp.  70-80.    An  investigation  conducted  by  Commissioner  Bul- 
ler,  in  1838,  under  instructions  from  Lord  Durham,  revealed  that  105 
individuals  or  families  owned  1,404,500  acres  "  outside  "  the  seignories 
—  that  is,  not  included  in  the  seignories. 

12  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  63. 

13  Testimony  of  Robert  Hodgson,  Attorney-General  for  Prince  Ed- 
ward Island,  Appendix  B.  to  Lord  Durham's  Report,  p.  169. 

14  Testimony  of  Thomas  Haviland,  Provincial  Treasurer  of  P.  E.  L, 
Ibid.,  p.  174. 

is  Ibid. 


THE   LANDED   PROPRIETORS  85 

which  was  settlement  duties.  Lord  Durham  reported  that 
these  conditions  were  totally  disregarded.  The  Government 
neglected  to  enforce  them  "  in  spite  of  the  constant  efforts 
of  the  people  and  the  legislature  to  force  upon  its  attention 
the  evils  under  which  they  labored." 

Lord  Durham's  report  continued :  "  The  great  bulk  of  the 
island  is  still  possessed  by  absentees,  who  hold  it  as  a  sort 
of  reversionary  interest,  which  requires  no  present  attention, 
but  may  become  valuable  some  day  or  other  through  the  grow- 
ing wants  of  the  inhabitants.  But,  in  the  meantime,  the  in- 
habitants are  subjected  to  the  greatest  inconvenience,  nay,  to 
the  most  serious  injury,  from  the  state  of  property  in  land. 
The  absent  proprietors  will  neither  improve  the  land,  nor 
will  let  others  improve  it.  They  retain  the  land,  and  keep 
it  in  a  state  of  wilderness."  18 

On  the  entire  Island  only  100,000  acres  were  under  culti- 
vation. Such  settlers  as  came  over  were  mostly  English  and 
Lowland  Scotch,  and  these  had  to  pay  prices  ranging  from 
six  shillings,  three  pence  (Halifax  Currency)  17  to  20  shil- 
lings per  acre,  or  take  out  long  leases. 

Two  Land  Companies  Get  Millions  of  Acres 

Besides  the  extraordinarily  large  land  grants  given  to  in- 
dividuals, enormous  areas  were  obtained  by  land  companies. 

The  Canada  Company,  headed  by  John  Gait,  was  one  of 
these.  In  1826  it  secured  3,500,000  acres  in  Ontario,  for 
which  land  it  paid  the  nominal  price  of  from  50  cents  to  $i  ari 
acre.  This  Company,  it  was  charged  in  the  Provincial  Parlia- 
ment, then  fraudulently  evaded  taxation  by  not  taking  out  a  pat- 
ent until  it  sold  the  land  to  individuals,  and  then  the  buyers  had 

i«  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  p.  86. 
17  Halifax   currency:    The   English   pound   sterling  was   $4.85;   the 
pound  Halifax  currency  was  $4. 


86  THE   LANDED   PROPRIETORS 

to  pay  the  tax.18  The  wealth  taken  by  this  Company  from 
Ontario  during  the  nearly  100  years  of  its  existence  has  been 
(extremely  large,  running  into  many  millions  of  dollars.  The 
'Company  still  owns  about  100,000  acres  of  land  in  Essex, 
Kent,  Lambdon,  Middlesex,  Huron  and  other  counties  in 
Ontario,  and  is  directed  from  London,  England. 

The  British  American  Land  Company  was  another  land  cor- 
poration. Its  operations  were  mainly  in  Lower  Canada, 
where  it  bought  from  the  Government  847,661  acres  and  sub- 
sequently the  remainder  of  1,044,272  acres  for  £170,321,  9 
shillings,  5  pence,  of  which  sum,  £60,000,  it  was  provided, 
could  be  used  for  improvements.  One  of  its  first  directors 
was  Russell  Ellice,  and  its  Commissioners  in  Canada  were 
Hon.  Peter  McGill  and  Hon.  George  MofTett.  Although  the 
Company  surrendered  part  of  its  purchase  in  1841,  the 
holdings  it  retained  were  enormous,  and  a  source  of 
large  and  increasing  revenues.  From  1844  to  1854  Sir  A. 
T.  Gait,  son  of  John  Gait,  was  its  Commissioner  in  Canada, 
and  he  was  succeeded  by  Richard  William  Heneker. 

These  latter  details,  seemingly  merely  a  record  of  forgotten 
names,  are  of  importance  since  both  the  British  American 
Land  Company  and  many  of  its  officials,  as  well  as  other  land 
speculators,  subsequently  used  part  of  the  capital  (thus  ac- 
quired in  selling  lands  at  exorbitant  prices  to  settlers)  in 
promoting  or  getting  control  of  banks,  railroads,  cotton  and 
woolen  factories,  mines  and  other  concerns.  John  Gait  be- 
came the  president  of  the  Buffalo,  Brantford  and  Goderich 
Railroad  Company.  The  British  American  Land  Company 
was  instrumental  (as  we  shall  see)  in  founding  the  textile 
mills  at  Sherbrooke,  and  likewise  were  A.  T.  Gait  and  Hene- 
ker. To  A.  T.  Gait's  multifold  later  railroad  and  other  ac- 
tivities we  shall  have  frequent  occasion  to  advert ; 19  as  for 

18  The  Toronto  Mirror,  February  3,  1838. 

19  For  the  present,  it  may  be  here  stated  that  A.  T.  Gait  was  an 


THE   LANDED   PROPRIETORS  87 

Heneker  he  became  president  of  the  Eastern  Townships 
Bank,  was  one  of  the  promoters  and  a  director  of  the  Inter- 
national Railway  Company,  and  he  became  a  promoter  and 
director  of  numerous  manufacturing  concerns,  one  of  which 
was  the  Paton  Manufacturing  Company  —  a  large  textile  es- 
tablishment —  at  Sherbrooke.20 


Canada  a  Dumping  Ground  for  Paupers 

Owning  such  huge  areas  of  land  in  Canada,  it  was  now  to 
the  interest  of  the  titled  and  other  absentee  proprietors  in 
England  and  Scotland  to  stimulate  emigration.  Every  new 
settler  meant  an  increase  in  the  increment  certain  to  flow  from 
their  land  holdings.  At  the  same  time,  the  parishes  of  Eng- 
land found  Canada  a  convenient  dumping  ground  for  their 
overflow  of  paupers. 

From  1815  to  1830  a  total  of  168,615  immigrants  arrived 
at  the  port  of  Quebec,  according  to  the  records  of  the  immi- 
gration agent.21  In  his  report  of  1839  Lord  Durham  stated 
that  in  the  previous  nine  years  263,089  immigrants  had  landed 
at  the  port  of  Quebec,  and  that  if  certain  facts  had  been 
known,  the  immigration  of  the  poorer  classes  would  have 
ceased.  Reduced  to  pauperism  by  the  results  of  centuries 
of  plundering,  extortion  and  exploitation  of  the  ruling  class 
at  home,  these  emigrants  were  herded  in  foul  ships  and  packed 
off  to  Canada  under  the  most  inhuman  and  horrible  conditions. 

active  promoter  of  the  Grand  Trunk  Railway  of  Canada  and  of  the 
St.  Lawrence  and  Atlantic  Railway  (which  soon  became  a  part  of  the 
Grand  Trunk  system).  As  Commissioner  of  the  British  American 
Land  Company  he  subscribed  for  $100,000  of  St.  Lawrence  and  At- 
lantic Railway  stock,  and  later  loaned  it  a  similar  sum. 

20  The   Sherbrooke   Cotton   Factory  was  chartered   March  29,   1845, 
by  A.  T.  Gait  and  others.    The  Sherbrooke   (Cotton)    Manufacturing 
Company  was  incorporated  with  a  capital  of  £50,000,  May  27,  1857,  by 
Gait,  Heneker  and  associates.     See,  Statutes  of  Canada,  1857,  P-  815. 

21  Report  on  Canadian  Archives,  Report  of  the  Archivist,  1899  Vol., 
p.  xiv. 


88  THE    LANDED    PROPRIETORS 


Condition  of  the  Immigrants 

Dr.  John  Skey,  Deputy  Inspector  General  of  Hospitals,  and 
president  of  the  Quebec  Emigrant's  Society,  testified  that  the 
emigrants  with  families  from  the  South  of  Ireland  in  particu- 
lar, as  well  as  the  pauper  emigrants  sent  by  parishes  from 
England,  arrived  in  large  proportions,  in  a  state  of  great 
poverty,  although  the  voluntary  emigrants  from  England  had 
a  little  money.22 

Dr.  Charles  Poole  testified  that  "  the  poorer  classes  of  Irish 
and  the  English  paupers  sent  by  parishes,  were,  on  arrival  of 
vessels,  in  many  instances,  entirely  without  provisions,  so 
much  so  that  it  was  necessary  immediately  to  supply  them 
with  food  from  shore;  and  some  of  these  ships  had  already 
received  food  and  water  from  other  vessels  with  which  they 
had  fallen  in.  ...  This  destitution,  or  shortness  of  provi- 
sions, combined  with  dirt  and  bad  ventilation,  had  invariably 
produced  fevers  of  a  contagious  character,  and  occasioned 
some  deaths  on  the  passage,  and  from  such  vessels  numbers 
varying  from  twenty  to  ninety  each  vessel,  had  been  admitted 
to  hospital  with  contagious  fevers  immediately  upon  arrival." 
For  lack  of  proper  food,  the  immigrants  "  fall  into  a  state  of 
debility  and  low  spirits  by  which  they  are  incapacitated  from 
the  exertions  required  for  cleanliness  and  exercise,  and  also 
indisposed  to  solid  food,  more  particularly  the  women  and 
children;  and  on  their  arrival  here  I  find  many  cases  of  ty- 
phus fever  among  them."  23 

The  testimony  given  by  Dr.  Joseph  Morrin,  Inspecting  Phy- 
sician of  the  Port  of  Quebec  and  a  Commissioner  of  the 
Marine  and  Emigrant  Hospital,  was  to  the  same  effect.  With 
few  exceptions,  he  said,  the  condition  of  the  ships  was  abom- 

22  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  X,  Ap- 
pendix B.,  p.  83. 
id.,  p.  89. 


THE   LANDED   PROPRIETORS  89 

inable,  so  much  so  that  the  pestiferous  odors  could  be  easily 
distinguished  (in  a  favorable  wind  or  in  a  dead  calm)  when 
an  emigrant  ship  arrived.  "  I  have  known  as  many  as  from 
thirty  to  forty  deaths  to  have  taken  place,  in  the  course  of  a 
voyage,  from  typhus  fever  on  board  of  a  ship  containing  from 
500  to  600  passengers ;  and  within  six  weeks  after  the  arrival 
of  some  vessels  and  the  landing  of  the  passengers  at  Quebec, 
the  hospital  has  received  upwards  of  100  patients  at  different 
times  from  among  them."  Children  of  sick  or  dead  parents 
were  left  without  protection  and  wholly  dependent  on  the 
casual  charity  of  the  inhabitants. 

Landed  Destitute  and  Turned  Adrift 

But  what  was  the  fate  of  those  immigrants  who  had  es- 
caped sickness? 

Even  those  who  had  sailed  with  a  little  money  were  often 
destitute;  the  extortions  of  the  ship  captains  on  the  passage 
had  robbed  them  of  their  last  shilling.24  Of  these  particular 
emigrants  Dr.  Morrin  reported  that  they  were  generally  for- 
cibly landed  by  the  masters  of  vessels,  and  without  a  shilling 
in  their  pockets  to  get  a  night's  lodging.  "  They  commonly 
established  themselves  along  the  wharves  and  at  the  different 
landing  places,  crowding  into  any  place  of  shelter  they  could 
obtain,  where  they  subsisted  principally  upon  the  charity  of 
the  inhabitants. 

"  For  six  weeks  at  a  time,  from  the  commencement  of  the 
emigrant  ship  season,  I  have  known  the  shores  of  the  river 
along  Quebec,  for  about  a  mile  and  a  half,  crowded  with  these 

24  The  captain  usually  told  the  emigrants  that  they  need  not  lay  in 
provisions  for  more  than  three  weeks  or  a  month,  well  knowing  that 
the  average  passage  was  six  weeks,  and  often  eight  or  nine  weeks. 
Laying  by  his  own  stock  of  provisions,  the  captain,  after  the  emi- 
grants' supplies  had  run  out,  obliged  them  to  pay  as  much  as  400  per 
cent,  on  the  cost  price  for  food,  and  of  nauseating  quality  at  that.— 
Ibid.,  p.  90. 


90  THE   LANDED   PROPRIETORS 

unfortunate  people,  the  places  of  those  who  might  have  moved 
off  being  constantly  supplied  by  fresh  arrivals,  and  there  be- 
ing daily  drafts  of  from  10  to  30  taken  to  the  hospital  with 
infectious  disease.  The  consequence  was  its  spread  among 
the  inhabitants  of  the  city,  especially  in  the  districts  in  which 
these  unfortunate  creatures  had  established  themselves. 
Those  who  were  not  absolutely  without  money  got  into  low 
taverns  and  boarding  houses  and  cellars  where  they  congre- 
gated in  immense  numbers,  and  where  their  state  was  not 
any  better  than  it  had  been  on  board  ship.  This  state  of 
things  existed  within  my  knowledge  from  1826  to  1832,  and 
probably  for  some  years  previously."  25 

According  to  Sir  James  Kempt,  who  reported  on  one  par- 
ticular shipload  of  immigrants  arriving  at  Quebec,  in  1830, 
those  immigrants  were  described  in  a  letter  from  the  magis- 
trates of  a  parish  in  England  as  industrious  people  who  had 
been  trained  to  some  branch  of  woolen  manufacture,  but  who 
would  "  cheerfully  accept  any  employment  that  might  be  of- 
fered." 2<J  It  appears  that  Kempt  remonstrated  in  the 
strongest  terms  on  the  cruelty  of  attempting  to  relieve  the 
English  and  Irish  parishes  by  sending  such  hordes  of  paupers 
to  a  distant  colony  when  they  arrived  destitute  among 
strangers.27 

A  Swarm  of  Impoverished  Workers 

Few  of  these  people  had  agricultural  knowledge;  numbers 
who  took  to  "  the  bush  "  found  that  they  could  not  make  a 
living,  and  thronged  to  the  cities.  "  Many  resort  to  the  large 
towns  in  the  Provinces,  with  their  starving  families  to  eke 
out  by  day-labor  and  begging  together  a  wretched  existence," 
while  such  others  as  could  go,  tempted  by  a  more  genial  cli- 

25  Imperial  Blue  Books  on  Affairs  Relating  to   Canada,  Durham's 
Report,  Vol.  X,  Appendix  B.,  pp.  86-87. 

26  Report  on  Canadian  Archives,  1899  Vol.,  p.  xiii. 


THE   LANDED   PROPRIETORS  9 1 

mate  and  higher  wages,  went  to  the  United  States.28  The 
many,  forced  by  stern  necessity,  remained  in  Canada.  The 
Toronto  Mirror,  in  an  editorial  of  May  20,  1842,  and  in  nu- 
merous other  editorials,  complained  that  Toronto  was  crowded 
with  laborers  and  mechanics  who  had  completed  the  railroads 
and  canals  in  Great  Britain,  and  that  large  numbers  of  these 
impoverished  workers  were  seeking  employment. 

Famine  in  Europe  soon  drove  greater  numbers  of  emi- 
grants, many  of  whom  were  agriculturalists,  to  Canada  and  the 
United  States;  and  of  these,  great  numbers  perished  during 
the  passage.  The  report  of  the  Commissioners  of  Immigra- 
tion for  the  year  1847  showed  that  in  that  year  of  famine  and 
disease,  17,445  British  subjects  died  on  the  passage  to  Canada 
and  New  Brunswick,  or  in  quarantine  or  in  the  hospitals. 
This  mortality  did  not  include  those  perishing  from  contagion 
disseminated  in  the  principal  Canadian  cities  and  settle- 
ments.29 In  1858  is  was  reckoned  that  of  the  European  emi- 
gration, three-fourths  were  agricultural  and  common  laborers 
whose  wages  (provided  that  they  obtained  work)  ranged 
in  Canada  from  $10  to  $20  a  month  with  board  and  lodg- 
ing.30 

Here,  then,  was  an  enormous  and  continuing  influx  of 
workers  which,  added  to  the  proletariat  already  in  Canada, 
formed  a  dependent  body  of  surplus  labor.  It  constituted  to 
a  considerable  extent  the  very  kind  of  labor  needed  at  that 
time  in  lumbering,  building  roads,  canals  and  railroads  and 
in  agricultural  pursuits.  The  era  of  native  manufacturing 
on  any  important  scale  had  not  come,  but  the  era  of  land  clear- 
ing, building  of  roads,  canals  and  railroads  was  creating 
fortunes  for  contractors  or  owners.  From  the  swelling  vol- 

28  Lord  Durham's  Report,  Imperial  Blue  Books,  etc.,  Vol.  X,  p.  92. 

29  Ibid.,  Vol.  27,  p.   56,  Joseph  Howe  to  Earl  Grey,  Jan.   16,   1851. 
Howe  stated  that  perhaps  an  equal  number  died  on  the  passage  to  the 
United  States. 

30  Canada  Directory,  1857-1858,  p.  628. 


92  THE  LANDED  PROPRIETORS 

ume  of  cheap  labor  the  capitalist  could  have  his  pick,  employ- 
ing them  at  the  lowest  possible  wages. 


Cruelty  of  the  Laws 

The  laws  were  pitilessly  barbaric  and  cruel.  Theoretic- 
ally, these  laws  applied  to  all  offenders,  but  the  prosecuting 
attorneys,  magistrates  and  judges  enforcing  them  were  all 
of  the  upper  class.  These  officials  visited  the  severest  punish- 
ment upon  poor  offenders. 

In  Ontario  the  laws  were  cruel  enough.  But  in  the  Prov- 
ince of  Quebec  they  were  more  so.  In  Montreal  54  persons 
—  some  mere  boys  —  were  hanged  between  the  years  of  1812 
and  1840  for  various  offenses,  mostly  of  minor  character. 
Seven  were  hanged  for  murder;  twelve  for  burglary;  one 
for  robbing;  two  for  shoplifting;  two  for  larceny;  thirteen  for 
stealing  horses,  cattle  or  sheep;  one  for  forgery;  two  for 
sacrilege;  twelve  for  high  treason  and  two  for  rape.31  In 
addition,  239  more  offenders  during  this  period  were  sen- 
tenced to  be  hanged  but  were  "  graciously "  reprieved ;  of 
these  cases,  39  were  for  burglary,  15  for  robbery,  23  for  lar- 
ceny, 46  for  horse,  cattle  and  sheep  stealing,  93  for  high 
treason,  etc.32 

For  petty  larceny,  a  woman's  punishment  was  often  25 
lashes  on  the  bare  back ;  and  men,  for  the  same  offense,  often 
received  50  lashes  on  the  naked  back.  If  a  soldier  committed 
any  breach  of  discipline,  his  sentence  varied  from  100  to  500 
lashes,  and  sometimes  it  was  1,000  lashes.  Even  during  the 
first  decades  of  the  nineteenth  century  grand  larceny  was 

31  Borthwick's  History  of  Montreal,  p.  94.    Until  its  abolition  in  the 
reign  of  George  IV,  the  ancient  privilege  of  "benefit  of  clergy"  re- 
mained, by  which  influential  criminals  claimed  the  right  of  trial  by 
clergy  instead  of  by  the  civil  authorities.     Even  boys  were  hanged  for 
the  most  trivial  offenses ;  in  1813,  B.  Clement,  a  boy  not  quite  14  years 
old,  was  executed  for  stealing  a  cow. 

32  Ibid. 


THE   LANDED   PROPRIETORS  93 

punished  by  branding  the  palm  of  the  hand  with  a  red  hot 
iron.  Negro  slavery  was  abolished  in  Ontario  in  1793,  but 
remained  in  force  in  the  Province  of  Quebec  until  1833;  if 
a  slave,  man  or  woman,  pilfered  the  least  article,  50  lashes  on 
the  naked  back  were  publicly  given.  The  pillory  was  long 
also  a  common  method  of  punishment  for  offenders  of  all 
ages  and  races.33 

In  Nova  Scotia,  any  servant  quitting  a  master  or  mistress 
without  leave,  was  subject  to  arrest,  and  upon  capture  was  re- 
quired to  serve  double  the  period  of  his  or  her  bonded  term ; 
the  term  "  servant "  comprised  not  only  domestic  menials  but 
many  varieties  of  laborers.  No  one  could  leave  the  Province 
without  a  pass,  and  any  ship  captain  taking  away  any  such 
"  fugitive,"  was  subject  to  a  fine  of  £50.  Poor  children  were 
torn  from  their  parents,  and  bound  out  as  apprentices  by  the 
overseers  of  the  poor.  Beggars  and  wanderers  were  sum- 
marily arrested,  and  by  force  hired  out  for  a  term  not  exceed- 
ing seven  years.  Idle  persons  or  tramps  were  treated  "  as 
rogues  and  vagabonds/'  and  imprisoned.  For  even  the  most 
trivial  "  felonies "  the  letter  "  T "  was  burned  on  the 
offender's  left  thumb,  and  the  commission  of  the  pettiest  lar- 
ceny entailed  a  prison  term  of  "  not  more  "  than  seven  years 
at  hard  labor.  Stocks  and  lashing  were  applied  for  misde- 
meanors. 

Atrocious  Jail  Conditions 

Such  were  some  of  the  punishments  inflicted,  early  in  the 
nineteenth  century,  upon  the  propertyless,  no  matter  what 
the  extenuating  circumstances,  however  young  or  old,  feeble 
or  sick.  Driven  by  poverty  into  some  violation  of  the 
minute  and  drastic  laws  enacted  for  the  protection  of  prop- 
erty, they  were  ruthlessly  punished  according  to  the  rigors 
of  the  prevailing  code. 

.,  pp.  87-94. 


94  THE   LANDED   PROPRIETORS 

Even  after  this  code  had  been  somewhat  altered,  the  penal 
laws  and  the  prisons  continued  to  be  instruments  of  cruelty 
and  terror. 

In  their  report  for  1846,  the  Inspector  for  the  Provincial 
Penitentiary  in  Canada  related  how  "  youths  of  so  tender  an 
age  as  eight  years  old  are  sent  to  the  Penitentiary,  the  rules 
of  which  impose  constant  hard  labor  and  silence,  and  who  are 
subject  to  the  same  punishment  as  mature  convicts."  At  the 
same  time  Prison  Chaplain  R.  J.  Rogers  reported  upon  "  the 
extraordinary  fact  of  a  convict,  only  eight  years  old,  having 
lately  been  introduced  into  the  Penitentiary;  and  further  that 
at  the  present  moment,  three  convicts  are  under  12,  and 
twelve  under  16,  years  of  age."  34 

The  varieties  and  species  of  abominable  tortures  and  other 
cruelties  inflicted  by  the  keepers  of  the  Provincial  Peniten- 
tiary at  Kingston  upon  the  convicts  were  graphically  described 
in  a  legislative  report. 

For  the  most  trivial  offense  they  were  flogged  mercilessly 
with  a  rawhide  or  put  to  the  torture  of  the  "  Box  "  or  the 
"  Water  Cure."  Frequently  the  keepers  amused  themselves 
firing  arrows  at  the  convicts  while  those  unfortunates  were  at 
meals.  The  bread-and-water  and  dungeon  punishment  was 
extremely  common,  and  if  a  convict  complained  of  the  star- 
vation diet,  he  was  starved  still  more  as  a  punishment  for  his 
presumption.  For  speaking  and  laughing,  convicts  were 
rigorously  punished.35 

It  was  at  about  this  time  that  what  was  styled  a  "  highly 
moral  sentiment "  developed  into  an  agitation  against  general 
solitary  imprisonment.  The  reason  was  by  no  means  ex- 
clusively humanitarian.  The  solitary  system  was  supplanted 

34  Legislative  Council  Sessional  Papers,  1846,  No.  2,  Vol.  5,  Appen- 
dix G. 

35  Legislative   Assembly   Sess.   Papers,    1849,    Vol.    VIII,    Appendix 
B.  B.  B.  B.  and  Ibid.,  1850,  Vol.  IX,  Appendix  R.  R. 


THE   LANDED   PROPRIETORS  95 

by  the  contract  system  under  which  convict  labor  was  hired 
out  to  manufacturers  who,  profiting  greatly,  were  strong  in 
their  praise  of  the  humanitarian  spirit  which  had  done  away 
with  solitary  confinement.36 


The  Jails  and  Prisons 

Not  only  were  the  jails  and  prisons  physically  loathsome, 
but  offenders  of  all  ages  and  degrees  were  indiscriminately 
herded  together  in  the  most  demoralizing  proximity.  We 
shall  here  simply  give  one  instance,  as  related  in  the  annual 
report,  in  1849,  °f  Walter  C.  Crofton,  secretary  of  the  Prison 
Registration  Board:  — 

"  I  take  the  liberty  of  stating  to  the  Board  an  instance 
which  came  under  my  own  observation,  as  one  of  a  case  too 
numerous,  I  fear: 

"  E.  D.,  a  girl  of  about  15  years  of  age,  the  daughter  of  a 
very  respectable  farmer,  hired  as  a  servant  in  a  gentleman's 
family.  She  was  accused  of  having  stolen  some  trifling  ar- 
ticle to  the  value  of  35.,  6d.,  as  laid  in  the  indictment,  and 
the  evidence  being  very  strong  against  her,  she  was  found 
guilty,  and  sentenced  to  six  months'  imprisonment.  Many 
exertions  were  used  to  obtain  a  mitigation  of  the  sentence, 
but  owing  to  the  obstinacy  of  the  prosecutor  they  proved  in 
vain ;  she  remained  the  period  of  her  sentence  in  the  ward  with 
two  depraved  characters,  and  came  out  one  of  the  worst  per- 
sons I  ever  met,  addicted  to  every  species  of  vice  and  infamy. 
She  had  lost  all  her  self-respect,  and  her  parents  had  cast  her 
off.  She  met  every  attempt  to  reason  with  her  .by  the  ex- 
pression that  '  she  had  been  sent  innocent  to  jail  and  that  the 
law  had  forced  her  to  become  a  vagabond ' ;  and  true  enough 
innocent  she  was,  for  the  very  articles  she  had  been  convicted 
of  stealing  were  found.  I  can  have  no  hesitation  in  assert- 

id.,  1850,  Vol.  IX,  Appendix  R.  R. 


96  THE  LANDED  PROPRIETORS 

ing  my  belief  that  such  cases  are  too  common,  and  yet  with 
a  knowledge  of  such  facts,  no  effort  has  been  made  to  intro- 
duce a  system  of  classification  in  our  District  Jails."37 

The  horrors  of  the  penal  code  were  supplemented  by  those 
of  the  civil;  under  the  imprisonment  for  debt  laws,  the  jails 
were  crowded  with  the  poor  whose  only  crime  was  that  they 
owed  a  little  money  to  some  landlord,  shopkeeper  or  merchant. 

37  Journal  of  the  Legislative  Assembly  of  Canada,  1849,  Appendix 
No.  i  to  Vol.  VIII.  (The  pages  in  these  records  were  not  numbered.) 
"Our  gaols,"  Crofton  said  further,  "are  little  better  than  nurseries 
of  crime;  old  offenders  are  kept,  as  it  were,  to  instruct  the  younger 
ones  how  they  may  best  succeed  in  their  profession." 


CHAPTER  VII 
REVOLT  AGAINST  FEUDALISM 

The  insurrection,  in  1837-1838,  led  by  William  Lyon  Mac- 
kenzie in  Ontario  and  by  Papineau  in  Quebec,  was  intrinsic- 
ally one  of  upsp ringing  capitalist  forces,  but  superficially  its 
character  was  composite,  blending  a  variety  of  factors  and 
elements.  It  is  not  the  purpose  here  to  give  any  perfunctory 
chronological  or  personal  narrative  of  that  movement,  but  to 
present  an  outline  of  the  vital  economic  causes  and  results. 

Grievances  of  the  Rebels 

The  proclamation  issued  by  Mackenzie,  as  Chairman  pro 
tern  of  the  insurrectionary  Provincial  Government  of  the 
State  of  Upper  Canada,  began  by  denouncing  the  "  blighting 
influence  of  military  despots,  strangers  from  Europe  ruling 
us,  not  according  to  laws  of  our  own  choice  but  by  the  ca- 
pricious dictates  of  their  arbitrary  power. 

"  They,"  read  on  the  proclamation,  "  have  taxed  us  at  their 
pleasure,  robbed  our  exchequer  and  carried  off  the  proceeds  to 
other  lands  —  they  have  bribed  and  corrupted  ministers  of 
the  Gospel  with  the  wealth  raised  by  our  industry  —  they 
have,  in  place  of  religious  liberty,  given  rectories  and  re- 
serves to  a  foreign  priesthood,  with  spiritual  power  dangerous 
to  our  peace,  as  a  people  —  they  have  bestowed  millions  of 
our  lands  on  a  company  of  Europeans  for  a  nominal  con- 
sideration, and  left  them  to  fleece  and  impoverish  our  country 
—  they  have  spurned  our  petitions,  involved  us  in  their  wars, 

e; 


98  REVOLT   AGAINST    FEUDALISM 

excited  feelings  of  national  and  sectional  animosity  in  coun- 
ties, townships  and  neighborhoods,  and  ruled  as  Ireland  has 
been  ruled,  to  the  advantage  of  persons  in  other  lands  and 
to  the  prostration  of  our  energies  as  a  people.  .  .  ." 

Then  declaring  the  movement  a  separatist  one,  the  procla- 
mation enumerated  the  reforms  sought.  These  included  a 
legislature  chosen  by  the  people,  free  press,  civil  and  relig- 
ious liberty,  free  education  and  other  changes  not  the  least 
significant  of  which  was  that  of  "  freedom  of  trade  — 
every  man  to  be  allowed  to  buy  at  the  cheapest  market  and 
sell  at  the  dearest."  * —  the  very  quintessence  of  rising  capi- 
talism, the  moving  principle  of  which  was  abolition  of  mo- 
nopoly and  of  all  feudal  restraints,  and  the  assurance  of 
unfettered  access  to  all  resources  and  markets  and  of  un- 
hindered competition. 

Abolition  of  Feudalism  Demanded 

In  Lower  Canada  the  proclamation  issued  by  Dr.  Robert 
Nelson,  president  of  the  insurrectionary  party,  declared  for 
repudiation  of  all  allegiance  to  Great  Britain  and  provided  for 
17  different  reforms. 

Among  these  were:  A  Republican  form  of  government; 
all  citizens  to  enjoy  the  same  rights,  and  Indians  were  to  be 
no  longer  disqualified  civilly ;  dissolution  between  Church  and 
State ;  abolition  of  feudal  or  seignorial  tenure  of  land  "  as 
if  such  a  tenure  had  never  existed  in  Canada  " ;  imprison- 
ment for  debt  no  longer  to  exist  except  in  such  cases  as 
should  be  specified  by  Act  thereafter;  sentence  of  death  no 
longer  to  be  passed  or  executed  except  in  cases  of  murder. 

1  This  proclamation  was  published  in  full  in  the  Toronto  Mirror, 
Dec.  30,  1837.  The  tempting  reward  of  300  acres  of  the  best  public 
lands  was  held  out  as  an  inducement  to  each  volunteer.  "  Tens  of 
millions  of  these  lands,  fair  and  fertile,  will  be  speedily  at  our  dis- 
posal with  the  vast  resources  of  a  country  more  extensive  and  rich 
in  natural  resources  than  the  United  Kingdom  and  old  France." 


REVOLT  AGAINST  FEUDALISM  99 

Other  reforms  called  for  were  freedom  of  the  press,  trial 
by  jury,  general  and  public  education,  elective  franchise  and 
the  like.  Another  provision  of  the  proclamation  declared  that 
"  all  Crown  lands,  also  such  as  are  called  Clergy  Reserves, 
and  such  as  are  nominally  in  possession  of  a  certain  company 
of  landholders  in  England,  called  the  '  British  American  Land 
Company,'  are  of  right  the  property  of  the  State  of  Lower 
Canada,"  except  such  parts  as  were  bought  by  persons  and 
held  in  good  faith.2 

Capital  to  Have  a  Free  Hand 

One  of  the  main  pleas  of  the  insurrectionists  was  that  capi- 
tal should  have  a  free  hand,  especially  in  the  line  of  develop- 
ment of  resources,  the  establishment  of  manufactories  and 
of  modern  systems  of  navigation  and  transportation.  They 
pointed  to  the  astounding  development  of  transportation, 
trade  and  manufacture  in  the  United  States,  and  asked  point- 
edly why  it  was  that  Canada  should  be  so  backward?  An- 
swering themselves,  they  replied  it  was  because  of  the  sur- 
viving feudalistic  conditions  which,  variously  in  both  Quebec 
and  Ontario  placed  monopolies  of  trade  and  of  land  in  the 
hands  of  the  Church,  seigneurs,  officials  and  companies 
(largely  absentee),  and  because  of  the  feudalistic  laws  in- 
compatible with  the  requirements  of  an  age,  the  spirit  of 
which  was  individual  enterprise  and  full  personal  freedom 
of  trade.3 

2  Republished    from  the   Montreal   Herald  in   the  Toronto   Mirror, 
March  17,  1838. 

3  The  mercantile   community  in   Montreal  and  elsewhere,  many  of 
whom  catered  to  the  seigneurs  and  other  landed  proprietors,  opposed 
the  insurrection.    "  The  Daily  Advocate,"  read  a  letter  of  the  times, 
''has  ceased  to  exist,  all  the  mercantile  community  haying  withdrawn 
their  support  on  its  change  of  front ;  its  staff  has  now  joined  the  revolu- 
tionary journal,  the  Vindicator.     The  destruction  of  the  British  Ameri- 
can Land  Company  is  one  of  their  principal  objects." — Rep.  on  Ca- 
nadian Archives,  1899  Vol.,  p.  877. 


100  REVOLT  AGAINST   FEUDALISM 

In  his  elaborate  report,  Lord  Durham  enumerated  some  of 
the  grievances.  By  an  Act  passed  in  1837,  he  wrote,  diffi- 
culties were  thrown  in  the  way  of  the  employment  of  capital 
in  banking,  and  that  the  banking  laws  tended  to  preserve  the 
monopoly  held  by  the  few  chartered  banks  in  Canada.4  No 
man  had  a  right  to  vote  at  elections  until  he  paid  the  whole 
of  the  purchase  money  for  public  or  Clergy  land,  and  as  it 
generally  took  a  period  of  from  four  to  ten  years,  he  had  to 
wait  long  before  he  could  vote.5  There  were  complaints  of 
great  impediments  to  industrial  progress.6 

Old  laws  prohibiting  the  importation  of  particular  articles 
except  from  England  —  laws  which  originally  had  been 
passed  to  protect  the  privilege  of  monopoly  in  Canada  —  still 
prevailed,  although  the  English  monopoly  had  been  removed; 
the  result  was  that  almost  all  of  those  particular  articles  used 
in  Ontario  were  smuggled  across  the  frontier.7 

But  interwoven  with  this  general  character  of  the  insur- 
rectionary movement  were  a  diversity  of  other  factors  which, 
although  extraneously  religious  or  sentimental,  were  in  reality 
largely  of  a  distinct  economic  nature. 

Other  Causes  of  the  Uprising 

Irritated  at  the  refusal  of  the  Church  of  England  clergy  to 
recognize  them  as  an  established  Church,  the  Scotch  Presby- 
terians gave  much  support  to  Mackenzie;  this  anger  at  the 
Church  of  England  clergy  was  based  not  upon  the  mere  re- 
fusal of  a  formal  recognition,  but  because  of  the  absence,  of 
such  recognition,  which  manifestly  would  have  been  a  prima 
facie  admission  that  the  Presbyterians  had  an  equal  right  in 
the  allotment  of  the  Clergy  Reserves. 

*  Imperial  Blue  Books  on  'Affairs  Relating  to  Canada,  Vol.  X,  p.  61. 
6  Ibid. 

*Ibid.,  p.  66, 
.,  p.  67. 


REVOLT  AGAINST  F£UDA]>I£M  IC\\ 

The  middle  and  the  working  classes  complained  that  the 
district  assessment  4aw  was  expressly  devised  to  tax  them  and 
favor  the  rich;  that  the  rich  not  only  did  not  pay  their  due 
proportion  of  the  taxes  but  actually  paid  less  than  did  those 
in  "  middling  circumstances."  8  There  was  a  close  monopoly 
of  the  professions  which  turned  many  of  the  professional 
newcomers  in  favor  of  the  insurrection.  A  British  surgeon, 
licensed  in  England,  could  not  practice  without  the  consent 
of  the  Ontario  Board  of  Examiners.  An  attorney  coming 
from  elsewhere,  had  to  submit  to  an  apprenticeship  of  five 
years  before  he  was  allowed  to  practice.  Barristers,  too,  hail- 
ing from  other  parts  complained  of  the  discriminations  put 
upon  them  by  Ontario  laws.9 

During  the  course  of  the  insurrection,  the  clergy  of  the 
favored  denominations,  professing  to  speak  in  the  name  of 
God,  made  the  strongest  efforts  to  break  down  the  move- 
ment, exhorting  the  people  that  they  must  yield  submis- 
sively to  constituted  authority. 

At  a  dinner  given  on  July  25,  1837,  to  140  of  the  Roman 
Catholic  clergy,  the  Roman  Catholic  Bishop  of  Montreal  was 
reported  to  have  said  that  the  clergy  "  were  to  represent  to 
their  parishioners  that  it  is  never  permitted  to  revolt  against 
lawful  authority,  nor  to  transgress  the  laws  of  the  land ;  that 
they  are  not  to  absolve  in  the  confessional  any  indication  of 
the  opinion  either  that  a  man  may  revolt  against  the  Govern- 
ment under  which  he  has  the  happiness  to  live,  or  that  it  is 
permitted  to  break  the  laws  of  the  country." 10  So  ran  on 
this  admonishing  address. 

These  were,  to  be  sure,  traditionally  hierarchic  instructions, 
but  they  were  a  curious  product  considering  that  when  feu- 

8  From  the  Upper  Canada  Herald,  republished  in  the  Toronto  Mir- 
ror, Dec.  27,  1839. 

9  Lord  Durham's  Report,  Imperial  Blue  Books,  etc.,  Vol.  X,  p.  61. 
10 Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  A,  "Con- 
fidential," 1828-1837,  Unnumbered  Doc.,  p.  4. 


•l\Di2:  REVOLT   AGAINST   FEUDALISM 

dalism  was  in  its  last  stages  a  little  later,  and  capitalism  rising 
triumphantly,  the  Roman  Catholic  Church  and  clergy  were 
among  the  original  native  investors  in  capitalist  enterprises. 
With  the  various  reforms  demanded,  including  the  abolition 
of  the  death  sentence  for  all  except  capital  crimes,  the  clergy 
evinced  no  sympathy. 

The  insurrection  was  put  down,  but  it  produced  many 
changes,  some  immediate,  others  gradual.  Imprisonment  for 
any  debt  under  £10  was  not  abolished  until  1849,  and  other 
reforms  were  slowly  enacted. 

Emigration  of  Peasants  and  Workers  from  Canada 

One  of  the  immediate  results  of  the  insurrection  was  the 
great  increase  of  emigration  from  Canada  to  the  United 
States,  beginning  principally  after  the  insurrections  of  1837 
and  1838.  This  emigration  included  both  agricultural  popu- 
lation as  well  as  that  of  the  workers  of  the  cities;  and  the 
exodus  increased  year  after  year. 

The  lumber  market  was  vastly  overstocked;  thirteen  mil- 
lions more  feet  of  lumber  were  produced  in  1846  than  the 
market  demand  justified.11  Large  fortunes  had  been  made 
in  the  lumber  trade,  and  the  activity  had  continued  on  the 
supposition  that  further  great  quantities  would  be  required  in 
the  construction  of  railroads  abroad  and  at  home. 

Workmen  of  the  cities  of  Quebec  and  Montreal,  formerly 
engaged  in  lumbering,  now  left  in  considerable  numbers  for 
the  United  States;  there  were  few  manufactories  in  Canada 
to  employ  this  labor,  and,  perforce,  they  had  to  drift  else- 
where. The  same  cause  led  to  the  exodus  of  laborers  and 
raftsmen.  Another  class  of  emigrants  from  the  Province  of 

11  Report  of  Select  Committee  on  the  Lumber  Trade,  Legislative 
Assembly  of  the  Province  of  Canada,  1849.  In  1846  the  quantity  of 
square  timber  brought  to  Quebec  was  33,300,463  feet;  the  quantity  ex- 
ported was  24,242,689  feet. 


REVOLT  AGAINST  FEUDALISM  1 03 

Quebec  were  young  men  "  of  good  families  "  who  could  not 
afford  to  buy  land  at  the  prevailing  high  prices.  These  fam- 
ilies were  subject  to  the  indignities  of  the  caste  system  and 
to  the  "  exactions  of  the  landed  proprietors  who  impose  even 
heavier  conditions  than  the  seigneurs.  They  hire  themselves 
in  the  manufactories  or  on  the  farms  of  the  United  States/' 

Still  another  division  of  migratory  workers  were  the  poor 
families  settled  on  the  seignories.  These  families  were  forced 
by  debt  to  emigrate  after  having  sold  their  lands  and  move- 
ables,  or  after  their  paltry  effects  had  been  sold  by  officers 
of  the  law.  Such  workers,  too,  sought  work  on  the  farms 
or  in  the  factories  of  the  United  States,  "  frequently  at  heavy, 
hard  and  bodily  labor."  12 

More  than  three-fourths  of  the  Canadians  in  the  United 
States  belonged  to  the  working  class.  There  they  were  em- 
ployed in  mills,  manufactories  or  as  simple  laborers,  and  were 
living  "  in  a  state  of  degradation  really  humiliating  to  our 
country.'5  Dismayed  at  losing  so  many  of  their  parishioners, 
the  priests  bitterly  complained  that  many  of  the  seigneurs 
had  refused  and  still  refused  "  to  encourage  the  establishment 
of  profitable  works  and  useful  manufactures  for  the  country, 
in  order  to  retain  exclusively  without  profit  to  themselves  or 
the  public,  the  numerous  water  powers  owned  by  them,  and 
for  which  they  are  offered  reasonable  prices." 13  The  com- 
mittee investigating  the  startling  migration  depended  much 
upon  the  testimony  of  priests,  who,  it  was  critically  pointed 
out  in  some  quarters,  had  nothing  to  say  of  the  exactions  of 
the  Church. 

Yet  another  matter  disquieting  to  the  shippers  was  the  fleeing 

12  Report  of  the  Select  Committee  Appointed  to  Inquire  into^  the 
Causes  and  Importance  of  Emigration,  etc.,  Appendix  to  the  Eighth 
Vol.  of  the  Journals  of  the  Legislative  Assembly,  Province  of  Canada, 
1849,  Vol.  I,  Appendix  A.  A.  A.  A.  A.  (The  pages  of  this  document 
are  not  numbered.) 


104  REVOLT  AGAINST  FEUDALISM 

of  large  numbers  of  seamen  to  the  United  States.  Of  20,- 
164  seamen  at  the  port  of  Quebec  in  1846,  there  were  3,549 
desertions.  The  ship  masters,  studiously  seeking  to  throw 
the  blame  upon  anybody  other  than  themselves,  accused  the 
taverns  and  tippling  houses  of  luring  the  seamen,  getting  them 
drunk  and  robbing  them.  But  between  the  exactions  of  crimp 
and  shipping  master,  the  seamen  were  effectively  despoiled 
before  any  other  agency  plundered  them;  if  in  debt,  as  they 
usually  were,  they  were  imprisoned ;  if  they  deserted,  the  force 
of  a  special  police  hunted  them  down,  and  if  they  were  de- 
tected, threw  them  into  loathsome  jails.14 

At  this  time,  it  would  appear  from  a  legislative  return,  the 
seigneurs  or  the  owners  of  seignories  owned  7,496,000  acres 
of  land  in  Lower  Canada,  and  the  Jesuits'  estates,  not  appro- 
priated by  the  Government,  covered  664,080  acres.  In  1831 
one  in  every  399  persons  in  Lower  Canada  was  living  upon 
alms;  in  1844,  one  in  every  151  of  the  population  was  a  rec- 
ognized pauper  subsisting  upon  alms.  "  This  shows  a  fear- 
ful increase  in  pauperism,"  said  the  report.  The  number  of 
illiterate  children  was  astonishing.15 

Despite  the  rebellion  of  1837-1838  the  Clergy  Reserves  were 
extremely  safe  from  forfeiture  or  confiscation,  and  likewise 
the  lands  of  the  Canada  Company  and  the  British  American 
Land  Company. 

But  the  contesting  Protestant  denominations  gained  their 
point.  The  legislature  of  Upper  Canada  in  1840  passed  an 
Act  distributing  the  lands  among  the  various  Protestant  sects, 
but  this  Act  was  disallowed  (or  vetoed) ;  and  in  the  same 
year  an  Imperial  Act  decreed  that  the  funds  from  the  sale  of 

14  Report  of  the  Special  Committee  on  the  Act  for  Regulating  the 
Shipping  of  Seamen,  Journals  of  the  Legislative  Assembly,  etc.,  1849, 
Appendix  to  the  Eighth  Vol.     (Pages  not  numbered.) 

15  Report  of  the  Board  of  Registration  and  Statistics,  etc.,  Journals  of 
the  Legislative  Assembly  of  the  Prov.  of  Canada,  1840,  Appendix  to  the 
Eighth  Vol.,  Appendix  B,  Vol.  III. 


REVOLT  AGAINST  FEUDALISM  IO5 

the  land  were  to  be  distributed  in  the  proportion  of  2  to  I 
between  the  Episcopalians  and  the  Presbyterians.  As  for  the 
remainder  of  the  Clergy  Reserves  to  be  sold,  one-third  of 
the  proceeds  were  to  go  to  the  Episcopalians,  one-sixth  to  the 
Presbyterians,  and  the  remainder  to  be  divided  among  the 
other  denominations.  Originally,  it  may  be  said,  the  Presby- 
terians had  been  excluded,  but,  contesting  the  case  in  the 
courts,  had  obtained  a  favorable  decision  in  England. 


Clergy  Denounce  Alienation  of  Their  Land  Reserves 

This  proposed  arrangement  by  no  means  satisfied  the  large 
party  intent  upon  obliterating  the  Clergy  Reserves.  This 
•party  comprised  settlers  and  lumber  and  other  capitalists. 

When,  in  1850,  a  Bill  was  introduced  in  the  Legislative 
Assembly  of  Canada  to  alienate  the  vested  interest  held  by 
the  Clergy  in  the  revenue  from  the  sale  of  the  reserves  (al- 
though insuring  them  stipends),  the  prelates  of  the  Episco- 
pal Church  raised  a  mighty  protest,  vociferously  calling  the 
measure  an  "  infidel "  one.  In  a  circular  to  the  Clergy,  Arch- 
deacon Stuart  of  Kingston,  and  the  Archdeacon  of  York, 
denounced  the  move  as  one  "of  direct  spoliation  of  the 
Church,"  and  as  "  flagrantly  wicked  and  unjust."  The  clergy 
were  advised  to  get  together  impressive  petitions,  and  were 
told  that  if  the  Church  members  would  "  rise  and  speak  in 
the  might  of  their  righteous  cause  .  .  .  their  voice  would 
soon  drown  the  cry  of  the  evil-minded  and  ungodly  faction 
which  aims  at  her  destruction."  The  petition  read  that  "  your 
petitioners  would  regard  the  success  of  such  an  attempt  as  a 
national  sin  of  the  deepest  dye  and  a  grievous  moral  degrada- 
tion." These  petitions  were  to  be  forwarded  to  the  Lord 
Bishop  of  Toronto  before  he  left  for  England.15 

1G  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  XVIII,  pp. 
2-3,  of  enclosed  document,  Clergy  Reserves  in  Canada. 


106  REVOLT  AGAINST  FEUDALISM 

On  September  17  and  October  18,  1852,  Mr.  Brown  moved 
a  motion  in  the  Legislative  Assembly  that  inasmuch  as  the 
Protestant  Clergy  had  got  by  fraud  or  error  300,000  acres  of 
land  in  Upper  Canada,  and  227,559  acres  in  Lower  Canada 
—  in  all  527,559  acres  —  that  measures  should  be  taken  to 
recover  the  funds  paid  for  these  particular  lands.17  Where- 
upon, the  Episcopal  Bishops  of  Quebec,  Toronto  and  Mon- 
treal successfully  protested  against  this  "  proposed  confisca- 
tion." 1S  In  1854  an  Act  was  finally  passed  alienating  from 
the  Church  all  vested  rights  in  the  Reserves,  but  leaving  the 
clergy  certain  stipends  and  allowances  "  during  their  natural 
lives  and  incumbrances." 


They  Get  Nearly  Four  Million  Dollars 

From  1814  to  1854  the  clergy  had  received  $2,181,319  from 
the  revenues  from  the  Clergy  Reserves.  Of  this  sum  the 
Episcopalian  Church  in  Upper  and  Lower  Canada  pocketed 
much  the  greater  share  —  £309,482  sterling  in  round  figures. 
To  the  Presbyterian  Church  and  Synod,  £90,891  sterling  had 
been  paid,  and  to  the  Roman  Catholics  in  Ontario  about  £40,- 
ooo.  The  Methodists  were  allotted  £21,855  sterling. 

After  the  passage  of  the  Act  of  1854,  abolishing  the  Clergy 
Reserves,  a  further  sum  of  $1,662,678  was  paid  to  the  clergy. 
Of  this  sum  the  Episcopalian  Church  at  Toronto  received 
£188,342  sterling,19  the  share  of  the  Presbyterians  was  £127,- 
448  sterling,  and  the  Roman  Catholics  received  £20,932  cur- 
rency. 

17  Ibid.,  pp.  30-31.    Further  Correspondence  on  Clergy  Reserves  in 
Canada. 

18  Ibid.,  p.  32. 

19  Bishop  Sweatman  of  Toronto  so  stated  it,  but  Archdeacon  Dixon 
of   Niagara   estimated   the   amount  at   £184,342.    It   was   paid   to   the 
Church    Society   of   Toronto    (the   Church   of    England   clergy).     See 
History  of  the  Church  of  England  in  Ontario,  by  Bishop  Sweatman  of 
Toronto,  and  the  Rev.  William  A.  Clark,  in  Canada;  An  Encyclopedia  of 


REVOLT  AGAINST   FEUDALISM  IO7 

The  total  in  dollars  of  all  payments  to  the  clergy  from  1814 
to  the  final  settlement  after  1854  was  $3,843,997.20 

Thus  passed  away  the  vested  right  of  the  Protestant 
clergy  in  those  munificent  grants  of  land  the  retention  of 
which  and  the  revenue  from  which  they  had  so  long  held  to 
be  all-essential  to  their  orthodox  activity.  By  no  means  was 
the  abolition  of  the  Clergy  Reserves  a  pleasant  matter  for 
the  Protestant  clergy ;  they  pathetically  complained  that  it  left 
them  without  solid,  revenue-producing  property,  while  the 
economic  power  of  the  Roman  Catholic  Church  was  left  un- 
impaired. 

Seminary  of  St.  Sulpice  Retains  Its  Estate 

This  plea  was,  indeed,  true.  The  force  of  the  insurrection 
had  come  and  gone  without  derogating  in  the  slightest  from 
the  power  of  that  Church. 

Against  the  Seminary  of  Montreal  (or  St.  Sulpice)  there 
had  long  been  a  bitter  undercurrent  of  opinion  in  Montreal 
and  elsewhere.  Frequently  —  in  1789,  1804,  1811,  and  in 
other  years  —  the  legal  opinions  of  the  high  law  officials  of 
the  Government  were  adverse  to  the  claims  of  the  Seminary. 
But  some  powerful  influence  intervened;  these  adverse  opin- 
ions were  never  enforced  in  the  form  of  judicial  decisions.21 

The  Seminary  claimed  to  own,  and  it  held,  the  seignory  of 

the  Country.  Sweatman  wrote  that,  "by  a  noble  act  of  disinterested- 
ness, all  of  the  clergy  but  one  agreed  to  leave  their  shares  as  a  perma- 
nent endowment  of  the  Church,  receiving  the  interest  only  for  their 
lifetime."  (P.  334.) 

20  Editors  Notes  on  the  History  of  the  Clergy  Reserves,  by  Castell 
Hopkins,  in  Canada;  An  Encyclopedia,  etc.,  Vol.  Ill,  pp.  154-155. 

21  In  their  fifth  report  to  the   British   Government,   Lord   Gosford, 
Charles  Edward  Grey  and  George  Gipps,  Lower  Canada  Commissioners, 
reported  in  1836  that  all  of  them  were  agreed  in  the  opinion  that  after 
the  British  Conquest,  the  Seminary  of  Montreal  had  no  valid  title  or 
standing,  but  was  dependent  wholly  upon  the  pleasure  of  the  Crown. 
But  they  recommended  that  the  Seminary's  title  be  confirmed. —  Im- 
perial Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  A,  1837,  pp.  145- 
146. 


IO8  REVOLT  AGAINST   FEUDALISM 

St.  Sulpice  in  Assumption  County,  and  the  Seignory  of  the 
Lake  of  the  Two  Mountains  on  the  Ottawa;  while  in  the  city 
of  Montreal  it  held  three  properties  of  1,280  acres  of  land  in 
all  —  then  mostly  on  the  outskirts  of  the  city  or  at  the  back 
of  the  Island,  but  in  more  modern  times  largely  in  or  near 
the  very  center  of  that  city.  The  Seminary  was  run  by 
twenty  members,  "  all  in  Holy  Orders,"  and  had  four  attached 
priests.  Its  college  contained  1,511  scholars.  It  exercised 
feudal  rights  and  demanded  payment  of  feudal  burdens;  it 
had  an  income  of  about  $33,500  a  year;  and  there  were  also 
(in  1836)  debts  of  £34,000  or  $170,000  due  it.  The  inhabit- 
ants of  Montreal  complained  of  its  exactions  and  usages,  and 
remonstrated  that  its  farm  of  St.  Gabriel  of  300  acres  on  the 
western  border  of  the  city  was  used  for  tillage,  thus  checking 
all  improvements  on  that  side  of  Montreal.22 

An  Act  of  Incorporation 

By  tfie  stroke  of  a  pen,  the  priests  of  the  Seminary  of  St. 
Sulpice  obtained  full  legal  title  to  their  real  estate  holdings, 
much  of  which  are  untaxed  and  which,  as  we  have  said,  are 
of  such  great  value  today. 

This  confirmation  was  secured  by  the  passage  of  an  Act,  in 
1839,  during  Lord  Sydenham's  administration  as  Governor- 
General. 

The  Act  created  the  Ecclesiastics  of  the  Seminary  of  St. 
Sulpice  into  a  corporation,  confirming  their  title,  and  provided 
that  the  Seminary  should  commute,  at  certain  prescribed  rates, 
with  their  censitaire  tenants  whenever  required  for  all  seigno- 

22  Imperial  Blue  Books,  etc.,  Vol.  A,  1837,  p.  145.  Many  years  be- 
fore this,  the  value  of  the  estates  of  the  Seminary  of  Montreal  was 
calculated  at  £2,000  a  year,  besides  large  tithes  in  grain  and  seignorial 
dues  on  mutations  of  property  "  which,  in  the  Seignory  of  Montreal, 
comprehending  the  whole  of  the  Town,  must  amount  to  a  large  sum." 
Report  on  Canadian  Archives,  1899  Vol.,  Note  C.,  p.  55. 


REVOLT  AGAINST  FEUDALISM  1 09 

rial  rights,  dues  and  burdens,  thus  gradually  extinguishing 
seignorial  or  feudal  dues.  The  Act  further  required  the  Ec- 
clesiastics of  the  Seminary  to  invest  surplus  funds  derived 
from  these  settlements  or  from  sales  of  lands  in  public  stocks 
of  Great  Britain  or  its  Colonies,  but  allowed  £30,000  to  be 
applied  in  the  purchase  of  houses,  lands  and  other  immovable 
property  for  income  purposes.  Finally,  the  Ecclesiastics  of 
the  Seminary  of  St.  Sulpice  were  to  furnish,  whenever  re- 
quired, a  statement  of  its  estate,  income,  debts  and  expendi- 
ture to  the  Governor,  Lieutenant-Governor  or  other  person 
administering  the  Government23 — a  provision  which,  so  far 
as  we  can  ascertain,  has  never  been  carried  out;  a  public 
statement  of  the  revenues,  income,  expenditure  and  invest- 
ments of  the  Seminary  of  St.  Sulpice  would  undoubtedly  dis- 
close some  highly  edifying  facts  as  to  the  present  wealth  and 
investments  of  this  holy  incorporated  institution. 

Revenues  of  the  Catholic  Church 

The  stripping  of  the  Episcopal  clergy  of  their  vested  rights 
in  ecclesiastical  land  grants  caused  far  more  trepidation  among 
that  clergy  than  if  their  entire  39  articles  of  faith  had  been 
abolished. 

Sadly,  Bishop  Strachan  had,  by  way  of  comparison,  pointed 
out  the  great  intrenched  wealth  of  the  Roman  Catholic  Church 
left  unimpaired  by  the  changes  in  process.  It  had,  he  said, 
its  regular  system  of  tithes  and  dues,  with  parsonages,  glebe 
and  other  endowments;  hence  had  increased  in  efficiency, 
wealth  and  importance.  He  estimated  that  the  Roman  Cath- 
olic Church  in  the  Province  of  Quebec  had  a  revenue  of 
£125,000  a  year,  a  sum  then  representing  a  money  capital  of 
£2,500,000.  At  the  very  low  price  of  six\ shillings  and  eight 
pence  an  acre,  he  further  said,  its  extensive  land  ownings  rep- 

23  Ordinances  of  the  Special  Council,  Lower  Canada,  pp.  520-524, 


110  REVOLT  AGAINST  FEUDALISM 

resented  a  capital  of  £700,000.  He  complained  of  "  the 
readiness  with  which  Lord  Sydenham  gave  title  to  a  few 
monks  of  St.  Sulpice,  covering  the  whole  city  and  island  of 
Montreal,  with  the  consent  of  the  Imperial  Government,  re- 
ceived or  implied.  .  .  ." 

At  the  same  time  that  the  vested  rights  in  the  Clergy  Re- 
serves were  blotted  out,  measures  were  also  taken  to  abolish 
feudal  rights  and  dues  in  Lower  Canada. 

The  Onerous  Feudal  System 

It  had  long  been  seen  that  unless  this  was  done,  the  full 
unshackled  development  of  capitalism  would  be  greatly  im- 
peded. A  committee  of  the  Legislative  Assembly  inquiring 
into  the  operation  of  feudal  tenures  had  reported  in  1843 
that  the  system  was  "  in  many  respects  vicious  and  productive 
of  extreme  injury."  The  feudal  tenant  not  only  had  to  pay 
heavy  dues,  but  the  many  reservations  to  which  he  was  com- 
pelled to  submit  by  his  lord  deprived  him  of  the  free  use  of 
his  land  as  proprietor.  In  many  instances  he  was  subjected 
to  fines  for  neglect  of  certain  feudal  services, —  in  some  cases, 
services  of  mere  form.  Thus  his  condition  was  fettered. 

"  Instead,"  went  on  the  committee's  report,  "  of  being  able 
to  add  to  his  resources  by  developing  such  advantages  as 
his  soil  or  its  natural  position  may  present  in  the  free  exer- 
cise of  mechanical  skill,  he  is  bound  to  the  land  for  the  mere 
purpose  of  cultivation,  and  is  dependent  on  its  return  for  a 
precarious  substance." 

Thus,  the  committee  added,  if  he  possessed  a  mill  site,  or  a 
spot  of  land  favorable  to  the  construction  and  operation  of 
machinery,  he  was  prohibited  from  using  it.  The  reserva- 
tions in  his  deed  of  concession  deprived  him  of  the  advantage 
of  it,  except  at  a  heavy  cost.  If  his  crop  failed  him,  he  would 
have  to  remain  in  a  state  of  indigence,  although  able  and  will- 


REVOLT  AGAINST  FEUDALISM  III 

ing  to  better  his  condition  by  mechanical  pursuits.  Hence, 
he  was  kept  in  a  perpetual  state  of  feebleness  and  dependence. 
"  He  can  never  escape  from  the.  tie  that  binds  him  and  his 
progeny  forever  to  the  soil  —  as  a  cultivator  he  is  born,  as 
a  cultivator  he  is  doomed  to  live  and  die." 

By  this  means,  the  committee  commented,  "  all  progressive 
improvement  in  the  country  is  checked;  its  resources  for  ad- 
vancement in  the  arts  of  civilized  life  are  in  the  hands  of  the 
seigneurs,  and  they  may  alone  reap  the  advantage."  Every 
time  that  land  property  was  sold,  the  seigneur  had  to  re'ceive 
his  feudal  mutation  fines  of  one-twelfth,  one-eighth  or  one- 
quarter  on  the  price.  This  fine  was  levied  also  on  the  tenant's 
improvements,  "  thereby  taxing  his  industry  to  an  unlimited 
extent."  The  committee  said  of  the  mutation  fine  that  "  al- 
though principally  oppressive  in  the  towns  and  villages,  it 
paralyzes  the  whole  country  by  its  influence,  for,  by  affect- 
ing property  in  the  towns  and  populous  villages,  the  seats  of 
wealth  and  intelligence,  its  baneful  influence  is  extended  in 
every  direction." 

Persisting  Feudal  Servitudes 

There  were  also  exercised  the  feudal  rights  of  preemp- 
tion, retrait  and  that  of  corvee, —  or  forced  day's  labor, — 
hindering  the  improvement  of  the  country.  The  retrait, 
when  misapplied,  prevented  free  conveyance  or  transfer  of 
property  —  thus  negativing  an  absolute  essential  of  the  de- 
velopment of  capital  and  resources.  The  corvee  was  "  odi- 
ous, and  humiliating  to  man,  a  badge  of  servitude  " ;  in  many 
instances,  the  committee  reported,  corvees  had  been  illegally 
superadded  to  the  original  deeds  of  concession."  24 

2*  The  above  are  some  extracts  from  the  Report  of  the  Commissioners 
Appointed  to  Inquire  into  the  State  of  the  Laws f  and  Other  Circum- 
stances Connected  with  the  Seignorial  Tenure,  Laid  before  the  Legis- 
lative Assembly,  Quebec,  October,  1843,  pp.  69-70. 


112  REVOLT  AGAINST  FEUDALISM 

Lording  it  completely  over  their  possessions,  many  of  the 
seigneurs,  at  the  same  time,  profited  richly  by  the  large  sums 
they  received  for  the  right  that  they  gave  to  lumber  firms 
or  companies  to  cut  and  saw  logs  on  their  seignories.  But 
the  lines  of  the  seignories  and  other  timber  concessions  were 
often  indefinite;  and  when  competing  forces  of  lumbermen 
tried  to  lumber  on  disputed  territory,  "  most  of  the  parties 
were  left  to  fight  the  matter  out  by  physical  force  —  the 
forces  being  brought  on  the  ground  for  the  purpose/' 25 

That  the  seigneurs,  both  French  and  English,  enforced 
every  iota  of  their  feudal  rights  against  their  tenants  is  evi- 
dent from  the  statement  of  the  number  of  executions  lodged 
in  the  sheriff's  office  at  Montreal  at  the  instance  of  the 
seigneurs.  From  October  5,  1839,  to  October  5,  1842,  there 
was  a  total  of  3,440  executions.26  In  turn,  the  sheriffs  ex- 
torted fortunes  in  fees  from  the  misfortunes  of  these  im- 
poverished peasants  and  manual  workers.  A  committee  of 
inquiry  reported  in  1849  tnat  Sheriff  Coffin  of  the  District  of 
Montreal  had  a  "  prodigious  income."  Likewise  other  sher- 
iffs reaped  fortunes  wrung  from  the  scanty  means  of  the 
poor  and  unfortunate,  whose  chattels  and  other  goods  were 
pitilessly  seized  by  the  bailiffs  at  the  command  of  the  sheriffs 
"  who  charged  20,  and  often  30  shillings  for  a  writ,  although 
five  shillings  would  have  been  enough."  27 

In  other  official  reports  further  facts  are  set  forth  as  to  the 
merciless  rigidity  with  which  hard  laws  were  enforced  against 
the  poor ;  at  every  turn  the  impoverished  peasant  and  laborer 
were  harshly  proceeded  against. 

85  Report  of  the  Select  Committee  on  the  Lumber  Trade,  Appendix 
to  the  Eighth  Vol.  of  the  Journals  of  the  Legislative  Assembly  of 
Canada,  1849,  Vol.  I,  Appendix,  P.  P.  P. 

26  Titles  and  Documents  Relative  to  Seignorial  Tenure,  etc.,  1843,  p. 

175- 

27  Appendix  to  Eighth  Vol.,  Vol.  I,  Journals  of  the  Legislative  As- 
sembly of  the  Province  of  Canada,  1849,  Report  of  the  Committee,  A. 
Gugy,  Chairman. 


REVOLT  AGAINST  FEUDALISM  113 

Feudal  Rights  Abolished 

All  of  the  aforesaid  feudal  rights  and  privileges  of  the 
seigneurs  were  abolished  by  successive  measures  and  means, 
beginning  with  an  Act  passed  by  the  Legislative  Assembly 
in  1854,  providing  for  the  suppression  of  feudal  tenures  and 
duties.  Surviving  in  Canada  more  than  60  years  after  its 
abolition  by  the  French  Revolution,  feudalism  had  to  break 
down  under  the  irresistible  advance  of  its  successor,  capital- 
ism. But  there  was  a  marked  difference  between  the  fate 
of  the  French  feudal  lords,  and  the  good  fortune  of  the 
Canadian  seigneurs.  The  one  faced  confiscation  and  exile 
or  the  guillotine ;  to  the  other  a  sum  of  more  than  $10,000,000 
has  been  paid,28  directly  and  indirectly,  since  1867  for  the 
taking  away  of  those  "  ancient  rights  "  which  for  more  than 
two  centuries  had  prevailed  intact. 

28  Sir  John  George  Bourinot's  Lord  Elgin,  pp.  187-188. 


CHAPTER  VIII 

SOVEREIGNTY  OF  THE  HUDSON'S  BAY 
COMPANY 

To  the  individual  (or  as  they  were  termed,  the  "  inde- 
pendent") traders  and  to  the  merchants,  factory  and  mill 
owners,  commercial  and  railway  men,  there  still  remained 
a  large  and  irritating  survival  of  feudalistic  times.  In  that 
era  when  full  and  unrestricted  competition  in  trade  and  the 
widest  latitude  for  the  exercise  of  trading,  manufacturing  and 
commercial  operations  were  increasingly  considered  indispen- 
sable to  the  unhindered  development  of  capital  and  individual 
enterprise,  the  interest  of  these  elements  demanded  that  all 
feudal  barriers  be  removed. 

This  particular  survival  was  the  monopoly  and  exclusive 
powers  claimed  and  enforced  by  the  Hudson's  Bay  Company. 
We  have  seen  how,  after  a  long  and  furious  contest,  signal- 
ized by  extensive  competitive  debauching  of  the  Indian  tribes 
with  rum,  and  by  fraud,  force,  and  bloodshed,  the  North 
West  Company  had  merged  into  the  Hudson's  Bay  Company. 
We  have  seen  also  how  the  Hudson's  Bay  Company  then  had 
secured  an  exclusive  license  of  trade  for  21  years.  In  1838 
this  exclusive  license  was  renewed  for  21  years  more.  The 
Company  now  sought  to  have  this  monopoly  renewed  again. 

Company  Seeks  a  Renewal  <?f  Its  Monopoly 

The  chief  argument  that  it  advanced,  in  1857,  why  its 
monopoly  should  be  renewed  was  that  when  there  was  com- 

114 


SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY  115 

petition  the  result  was  the  widespread  use  of  liquor  to  stupefy 
and  defraud  the  Indians,  and  the  impossibility  of  the  mission- 
aries peacefully  carrying  on  their  work  of  diffusing  civiliza- 
tion and  Christianity  among  the  aborigines. 

Thus,  despite  its  persistent  record  of  nearly  two  centuries, 
the  Company,  it  was  sharply  pointed  out,  thrust  itself  for- 
ward in  the  sanctimonious  guise  of  an  errant  of  colonization 
and  civilization,  claiming  morality  and  religion  as  its  chief 
aims.  Concurrently,  it  never  neglected  an  opportunity,  how- 
ever, of  insisting  upon  and  reiterating  its  ancient  exclusive 
rights  and  privileges  derived  from  Charles  II  —  rights  and 
privileges  which,  it  declared,  were  still  valid  and  binding. 

But  times  had  greatly  altered.  The  Company  now  found 
itself  confronted  by  numbers  of  hostile  small  capitalists  who, 
banded  in  associations  and  boards  of  trade,  saw  clearly  that 
if  the  resources  of  the  country  were  to  be  developed  by  in- 
dividual initiative  and  enterprise,  the  exclusive  sway  of  the 
Hudson's  Bay  Company  would  have  to  be  terminated  and 
its  monopoly  effaced,  as  was  happening  to  the  feudalism  of 
the  seigneurs  and  the  Church.  These  aggregated  individual 
capitalists,  with  all  the  fresh  and  determined  aggressiveness 
of  their  age,  set  out  to  fight  the  claims  of  the  Hudson's  Bay 
Company  and  to  rid  themselves  of  its  monopoly.  Support- 
ing them  were  the  independent  small  traders  and  the  pro- 
prietary farmers. 

They  did  not  lack  ample  material  with  which  to  expose 
what  they  energetically  charged  was  the  hollowness  of  the 
pretenses  put  forward  by  the  Hudson's  Bay  Company  that 
by  its  monopoly  it  had  been  able  to  suppress  the  use  of  liquor 
and  to  carry  on  its  christianizing  operations  among  the  In- 
dians. In  the  elaborate  investigation  made  by  the  British 
Parliamentary  Committee,  in  1857,  the  evidence  as  to  the 
long-continued  practices  of  that  Company  was  so  thorough 
and  so  conclusive  that  it  seems  a  matter  of  great  wonderment 


Il6  SOVEREIGNTY  OF   HUDSON'S   BAY   COMPANY 

how  it  happened  that  such  damaging  testimony  was  allowed 
to  be  embedded  in  the  permanent  records,  considering  that 
many  of  the  British  aristocracy,  including  members  of  Parlia- 
ment, were  at  that  very  time  shareholders  in  the  Hudson's 
Bay  Company. 

Treatment  of  the  Indians 

The  principal  witness  for  the  Company,  Edward  Ellice, 
himself  a  member  of  the  House  of  Commons  and  of  the  Se- 
lect Parliamentary  Committee,  took  great  pains  in  his  attempt 
to  show  that  the  merger  of  the  two  companies  had  been  ex- 
tremely salutary.  The  effect,  he  said,  "  has  been  beneficial 
to  every  party  interested.  It  has  been  beneficial  to  the  In- 
dians; quiet  has  been  universally  restored.'* 

Q.  "  Might  not  the  necessary  effect  of  the  whole  of  the 
fur  trade  being  in  the  hands  of  a  single  company  be  to  place 
the  Indians  entirely  at  the  mercy  of  that  Company  \vith  re- 
gard to  the  price  which  is  given  them  for  their  furs  ?  " 

A.  "  Of  course,  it  must  be  so ;  it  must  either  place  them 
at  the  mercy  of  this  Company,  or  leave  them  at  the  mercy  of 
whichever  competitor  for  the  trade  shall  give  them  the  most 
gin  or  rum,  to  set  them  at  war  one  with  the  other." 

If  competition  should  be  restored,  Ellice  added,  the  em- 
ployment of  rum  would  be  so  inevitable  that  it  would  be 
impossible  to  prevent  it;  the  Hudson's  Bay  Company,  he 
averred,  had  taken  every  possible  precaution  to  prevent  the 
introduction  of  spirits,  but  (said  he)  if  an  American  came 
across  the  border,  and  if  there  was  a  trade  contest,  the  article 
invariably  used  to  corrupt  the  Indians  was  spirits.1 

On  the  other  hand,  a  protest  made  by  the  United  States 
Government,  in  1850,  against  the  debauching  of  the  Indians 
on  the  frontier  by  the  Hudson's  Bay  Company,  was  laid  be- 

1  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Company, 
etc.,  House  of  Commons,  London,  1857,  p.  326. 


SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY  117 

fore  the  Committee.  This  protest,  handed  to  Lord  Palmer- 
ston  by  Abbott  Lawrence  of  the  United  States  Legation,  at 
London,  had  stated  that,  "  Representations  have  been  made 
to  the  Government  of  the  United  States  from  reliable  sources 
that  the  Hudson's  Bay  Company  annually  furnished  to  the 
Indians  on  the  north-west  frontier  of  the  United  States,  large 
quantities  of  spirituous  liquor,  endangering  thereby  the  peace 
of  the  border,  as  well  as  corrupting  the  Indians  them- 
selves." 

Lawrence  enclosed  a  letter,  dated  December  8,  1849,  from 
Congressman  Henry  W.  Sibley,  reading :  "  There  exists  on 
our  north-west  boundary  a  state  of  things  which  calls  impera- 
tively for  the  interference  of  the  Government.  I  refer  to 
the  immense  amount  of  spirituous  liquor  which  is  imported 
by  the  Hudson's  Bay  Company  annually,  not  only  for  their 
trade  in  the  British  possessions,  but  which  is  furnished  to 
the  Indians  who  reside  and  hunt  within  the  limits  of  the 
United  States.  That  this  evil  exists  to  a  very  great  extent, 
and  renders  null  all  of  the  efforts  of  our  Government  to  pre- 
vent the  introduction  of  ardent  spirits  into  the  Indian  coun- 
try, is  a  fact  which  can  be  established  by  incontestable  testi- 
mony, and  has  already  been  made  the  subject  of  memorials 
to  the  proper  department.  .  .  ." 2 

The  Hudson's  Bay  Company,  through  its  governor,  Sir  John 
Pelly,  replied  throwing  the  blame  upon  the  American  traders. 
But  it  was  a  significant  coincidence  that  a  year  and  three 
months  after  the  protest  of  the  United  States  Government, 
the  Council  of  the  Hudson's  Bay  Company  for  the  southern 
department  of  Rupert's  Land,  issued  an  order,  May  30,  185  r, 
that  after  that  date  no  liquor  was  to  be  sold  from  Moose 
Depot  to  the  Company's  officers  or  servants,  or  to  Indians, 
or  to  strangers.3 

2  Ibid.,  Appendix  No.  2,  p.  369. 

3  Ibid.,  p.  368.    This  order  was  entered  in  the  Council's  Minutes. 


Il8  SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY 


Widespread  Use  of  Rum 

The  drenching  of  the  Indian  tribes  with  liquor  seems  to 
have  gone  on  as  briskly  and  indomitably  in  the  east  of  Canada 
as  in  the  remote  stretches  of  the  west.  In  the  vast  western 
expanses,  the  Hudson's  Bay  Company  was  law-maker  and 
law-enforcer,  and  its  officials  were  supreme  dictators.  In  the 
older-settled  Eastern  Provinces  it  likewise  violated  laws,  and 
when  it  did  so,  it  often  commanded  the  support  of  the  very 
officials  whose  duty  it  was  to  enforce  the  law. 

This  was  instanced  in  a  notable  case  in  1831  in  the  proceed- 
ings of  the  Legislature  of  Lower  Canada  (Quebec)  against 
James  Stuart,  Attorney-General  of  that  Province.  One  Wil- 
liam Lamson  had  a  lease  of  a  stretch  of  95  leagues  of  land, 
with  the  exclusive  right  of  trading  with  the  Indians.  Ac- 
cording to  the  report  of  the  Legislative  Committee  on  Griev- 
ances, the  partners  and  employes  of  the  Hudson's  Bay  Com- 
pany assaulted,  drove  out,  arrested  and  imprisoned  Lamson's 
men,  destroyed  their  huts,  then  plied  the  Indians  with  liquor, 
debauching  and  intoxicating  them,  and  seized  and  took  away 
their  furs.  When  Lamson  went  to  bring  criminal  action  he 
found,  "  to  his  great  surprise  and  mortification "  that  At- 
torney-General James  Stuart  had  been  retained  as  private 
counsel  and  attorney  for  the  Hudson's  Bay  Company,  and  that 
he  had  constituted  himself  as  their  advocate.  The  Assembly 
passed  resolutions  calling  for  Stuart's  dismissal;  he  was  sus- 
pended, March  28,  1831,  by  the  Governor-in-Chief,  Lord  Dal- 
housie. 

Liquor  Indispensable  to  Trade 

Many  of  the  tribes  on  the  Lower  St.  Lawrence  were  em- 
ployed by  the  Hudson's  Bay  Company;  and  as  to  conditions 
among  the  Nipissing,  Algonquin  and  Iroquois  tribes,  a  special 
Quebec  Commission  reported  in  1858  that,  "The  unlimited 


SOVEREIGNTY   OF    HUDSON'S   BAY   COMPANY  1 19 

use  of  ardent  spirits,  however,  seems  to  be  the  great  check  to 
their  advancement.  On  returning  to  their  settlements  with 
their  peltries,  everything  is  sacrificed  to  the  gratification  of 
this  passion,  and  the  whites  even  find  it  to  their  advantage 
to  follow  them  into  remote  hunting  grounds,  in  order,  by 
pandering  to  their  infatuation  for  liquor,  to  obtain,  at  an  al- 
most nominal  rate,  the  fruits  of  months  of  toil."  4 

At  the  same  time  Fathers  T.  Hannipeaux  and  M.  Ferard, 
Roman  Catholic  missionaries  on  Manitoulin  Island,  reported, 
in  August,  1857,  that,  "  Our  Indians  are  not  of  themselves 
addicted  to  drink,  but  they  are  supplied  with  liquor  .  .  .  The 
greater  part  of  these  bands  subsist  by  hunting  and  fishing, 
and  by  selling  their  furs  to  the  Traders  of  the  Hudson's  Bay 
Company.  ...  To  all  who  have  at  all  studied  the  history  of 
the  Tribes  formerly  inhabiting  these  tracts  of  land,  now1  so 
depopulated,  it  is  as  evident  as  that  two  and  twamake  four 
that  whiskey  has  destroyed  a  greater  number  of  Indians  than 
either  war  or  disease."  The  report  went  on: 

".  .  .  About  20  or  25  years  ago,  before  the  appearance  of 
Missionaries  in  these  regions,  no  barter  took  place  between  the 
Trader  and  the  Indian  without  the  first  offering  the  other 
whiskey.  Frequently  even  the  Trader  paid  the  Indian  with 
liquor.  Then  could  be  seen  the  disgusting  spectacle  of  a 
whole  lodge,  from  the  decrepitude  of  old  age  to  the  child  barely 
out  of  his  cradle,  plunged  for  days  and  nights  in  the  stupor 
of  a  brutish  drunkenness." 

The  missionaries  said  that  they  tried  hard  to  bring  about 
a  reform,  so  that  there  were  now  few  habitual  drunkards, 
but  "  the  heartless  trader,  who  knows  their  unfortunate  pro- 
pensity, again  causes  their  downfall.  The  vice  of  drunken- 
ness is  here  detested  even  by  those  who  are  addicted  to  it; 

4  Report  of  the  Special  Commissioners,  Appointed  September  8,  1856, 
to  Investigate  Indian  Affairs  in  Canada,  Appendix  No.  21,  Vol.  XVI, 
No.  6,  Appendix  to  i6th  Vol.  of  the  Journals  of  the  Legislative  As- 
sembly of  Canada,  1858,  p.  3. 


I2O  SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY 

but  the  Trader,  who  looks  to  his  own  interest,  is  pitiless, 
laughs  at  the  misery  and  degradation  of  the  Indian,  and 
offers  him  the  fatal  draught  whenever  he  can  do  so  with  im- 
punity. In  the  central  villages,  particularly  those  more  re- 
mote from  the  center,5  the  abuse  of  strong  drinks  is  more 
common,  but  we  also  remark  that  the  Spring  and  the  Autumn, 
at  the  time  when  the  Traders  make  their  appearance  for  the 
purposes  of  trade,  are  the  periods  when  the  evil  re-appears 
periodically,  and  it  is  easy  to  surmise  the  cause." 

The  traders,  reported  the  missionaries  further,  gave  the 
Indians  worthless  but  garish  objects  in  trade;  they  paid  the 
Indians  ruinously  low  prices  for  vegetables  and  fish  which 
they  resold  at  large  prices;  and  by  their  credit  system  kept 
the  Indians  in  a  state  of  slavishness  and  dependence.  The 
culmination  was  that  the  Indian  led  "  a  miserable  existence, 
and  has  nothing  but  wretchedness  in  perspective  before 
him."  • 

These  reports  are  merely  a  few  of  those  in  the  Canadian 
archives,  and  were  not  part  of  the  voluminous  mass  of  evi- 
dence submitted  to  the  British  Parliamentary  Select  Commit- 
tee. The  fact  was  brought  out  in  evidence  in  1857  that  the 
Hudson's  Bay  Company  imported  in  its  ships  about  4,900 
gallons  of  spirituous  liquors  annually.  It  was  notorious  that 
the  Hudson's  Bay  Company  exchanged  spirits  in  barter  for 
fur;  at  the  time,  on  the  Pembina  River,  when  Norman  W. 
Kittson  of  Minnesota,  and  the  American  Fur  Company, 
(John  Jacob  Astor's  Company)  and  the  Hudson's  Bay  Com- 
pany were  in  opposition  (competition),  "  the  liquor  was  the 
principal  item  of  goods  which  went  out  to  supply  the  Indians 

5  Manitoulin  Island  is  135  miles  long,  lying  in  Lake  Huron. 

« Report  upon  the  Present  State  of  the  Great  Manitoulin  Island, 
and  upon  that  of  the  Nomadic  Bands  of  Tribes  on  the  Northern 
Shore  of  Lake  Huron,  Appendix  No.  21,  Vol.  XVI,  No.  6,  Appendix  to 
i6th  Vol.,  Journals  of  the  Legislative  Assembly,  Prov.  of  Canada,  pp. 
15-16. 


SOVEREIGNTY   OF   HUDSON  S   BAY   COMPANY  121 

to  get  the  furs."  7  Rev.  Griffith  Owen  Corbett  testified  that 
he  had  traveled  1,000  miles  in  the  Hudson's  Bay  Company's 
territories  during  three  years ;  that  he  had  personally  seen  the 
demoralizing  effects  of  ardent  spirits  on  the  Indians;  that  he 
had  seen  Indians  intoxicated  within  the  gates  of  Upper  Fort 
Garry  (Winnipeg)  ;  and  that  this  liquor  must  have  come  from 
the  Hudson's  Bay  Company,  inasmuch  as  there  was  no  other 
source  in  the  immediate  vicinity.  He  related  instances  within 
his  personal  knowledge  of  where  rum  was  traded  by  the 
Company  in  exchange  for  furs.8 

Independent  Traders  Suppressed 

The  point  frequently  arose  that  if  these  practices  were  com- 
mitted in  the  settled  regions,  what  must  have  been  the  enormi- 
ties in  the  isolated  and  distant  stretches  where  none  but  the 
company's  representatives  and  traders  were? 

At  the  same  time,  so  it  would  appear,  the  Company  took 
every  measure  to  keep  out  or  suppress  individual  traders. 
The  Company  tried  in  every  way  to  close  up  the  old  traveled 
routes  which  would  have  pointed  the  way  to  other  traders; 
if  an  independent  trader  ventured  to  establish  himself  on 
Lake  Superior  or  on  the  other  lakes,  or  in  the  interior,  he 
was  driven  out  and  his  property  destroyed;  he  could  get  no 
redress;  even  in  1857,  with  more  modern  facilities  of  trans- 
portation, when  the  Country  was  somewhat  opened  up  to  the 
jurisdiction  of  courts  not  as  far  distant  as  in  decades  previ- 
ously, "  outrages  are  committed  by  the  Hudson's  Bay  Com- 
pany with  impunity."  9 

7  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Company, 
etc.,  London,  1857,  Testimony  of  John  McLaughlin,  p.  274. 

8  Ibid.,  pp.  147-148. 

9  Testimony  of  Allan   MacDonell,  Report  of  the  Select  Legislative 
Committee  Sitting  in  Canada  to  Receive  and  Collect  Information  as 
to  the  Rights  of  the  Hudson's  Bay  Co.,  etc.   (embodied  in  Report  of 
British  Parliament  Committee,  1857)  p.  387. 


122  SOVEREIGNTY  OF   HUDSON 'S   BAY   COMPANY 


Settlers  and  Indians  Intimidated 

Absolutely  controlling  supplies  of  every  description,  the 
Hudson's  Bay  Company  refused  to  give  even  the  bare  neces- 
sities of  life  to  settlers  and  Indians  if  its  interests  demanded 
that  they  be  denied  them.  Testifying  that  he  had  seen  an 
Indian  hung  when  he  was  on  the  Pembina,  John  McLaughlin 
was  asked  by  the  House  of  Commons  Committee  whether  he 
did  not  know  that  the  Company,  by  Act  of  Parliament,  was 
prohibited  from  trying  or  executing  cases  of  capital  punish- 
ment. He  knew  it,  he  said,  and  so  did  all  of  the  other  set- 
tlers in  the  Red  River  Settlement. 

Q.  "  How  is  it  that  the  Colonists  resident  on  the  spot  did 
not  remonstrate  against  this  execution  ?  " 

A.  "  It  is  impossible  for  them  to  remonstrate  there ;  they 
are  too  much  under  control  of  the  Company;  the  Company 
would  stop  supplies."  10 

As  to  the  intimidations  practiced  upon  the  Indians  by 
threatening  them  with  starvation,  the  testimony  was  over- 
whelming. Chief  Justice  William  Henry  Draper,  of  the 
Court  of  Common  Pleas  of  Upper  Canada,  agreed  that  the 
system  established  by  the  Hudson's  Bay  Company  was  such 
as  to  place  the  Indians  in  a  state  of  utter  dependence.  "  If 
what  I  read,"  he  testified,  "  is  true,  that  a  silver  fox  skin,  or 
some  other  valuable  skins,  are  obtained  for  three  or  four  tin 
kettles,  of  course,  it  must  be  so,  but  I  have  no  knowledge  of 
it  as  a  fact  myself."  n 

The  principal  articles  traded  were  blankets  and  cottons, 
some  ammunition  and  tobacco.  If  an  Indian  sold  furs  to 
settlers,  the  Company  seized  the  furs  and  impounded  them, 

10  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
1857,  p.  280. 
11 /Wd.,  p.  228. 


SOVEREIGNTY  OF   HUDSON'S  BAY   COMPANY  123 

and  imprisoned  the  Indian.12  The  Company  also  refused  sup- 
plies and  provisions  to  Indians  who  did  not  comply  with  the 
most  minute  of  its  numerous  regulations;  in  such  cases,  the 
consequence  was  starvation.13  The  Indians  had  become  de- 
pendent upon  the  Company  for  their  powder  and  shot;  they 
had  lost  their  original  mode  of  hunting;  the  gun  had  replaced 
the  bow  and  arrow.  "  To  make  an  Indian  really  a  hunter 
with  the  bow  and  arrow  —  a  deer  stalker  —  takes  a  whole 
life;  you  cannot  reteach  the  present  generation;  it  takes  a 
whole  life  to  approach  at  that  distance  the  animal  for  which 
the  bow  and  arrow  came  into  use.  Of  course,  that  is  one  of 
the  main  causes  of  their  decline."  And  if  they  could  not  get 
ammunition  the  Indians  could  no  longer  obtain  furs,  and  in 
turn  provisions  and  supplies ;  well  knowing  this,  the  Hudson's 
Bay  Company  used  the  fact  as  a  lever  to  hold  the  Indians 
completely  under  their  control.14 

The  Hudson's  Bay  Company  even  prevented  Indians  from 
trading  with  Indians,  or  making  presents  of  furs  to  one 
another,  or  wearing  furs,  "  and  tried  to  use  missionaries  to 

12  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Company, 
etc.     Testimony  of  John  McLaughlin,  p.  263. 

13  Ibid.    Notwithstanding  such  testimony,  and  the  memorials  of  both 
Indians  and  settlers,  all  of  the  current  so-called  histories  seek  to  rep- 
resent the   Hudson's   Bay  Company   as  a  benevolent  corporation.     A 
typical  instance  is  Begg's  work,  History  of  the  Northwest.     Referring 
to  the  Indians  he  wrote   (Vol.  I,  p.  219)  :  — "  But  sometimes  disease 
and  death  would  come  among  them,  and  at  others,  through  their  own 
improvidence,    starvation    would    stalk    in    their    midst.     It    was    then 
that  the  kindly  offices  of  the  Hudson's  Bay  Company's  servants  would 
be   felt — •  hungry  mouths  would  be  filled  as  far  as  the  resources  of 
the  post  would  allow,  medicines  and  clothes  would  be  furnished,  and 
the   grateful    Indians   would   feel    themselves    bound    to    their   white 
brothers   by   the  greatest  of  all  ties,   that  of  gratitude.    It  was  this 
fatherly  care  of  the  Indians  that  gave  the  Hudson's  Bay  Company  their 
great  influence  over  the  savage  tribes  of  the  North  West,"  etc.,  etc. 
(The  italics  are  mine. —  G.  M.) 

14  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
p.  315.    Testimony  of  Richard  King,  M.  D.,  who  was  in  the  North  West 
for  three  years. 


124  SOVEREIGNTY  OF   HUDSON'S   BAY   COMPANY 

tell  Indians  that  the  anger  of  God  would  follow  wearing  a 
f  oxskin."  15 

Of  the  misery  and  degradation  of  the  Indians  of  Lake 
Superior  when  dependent  upon  the  Hudson's  Bay  Company's 
posts  for  all  of  the  necessities  of  life,  Allan  MacDonell  testi- 
fied that  he  could  give  many  instances.  The  Company's  sys- 
tem, he  declared,  was  one  calculated  to  destroy  the  capabili- 
ties of  the  Indian  trying  to  emancipate  himself  from  the 
bondage  "of  an  avaricious  community  of  trading  monopo- 
lists." He  related  a  particular  instance  at  Penetanguishine, 
of  how  the  Hudson's  Bay  Company  agent  had  forbidden  the 
Indians  from  gathering  cranberries,  which  were  sold  at  a  very 
remunerative  price  to  a  white  who  had  engaged  them.  The 
Company  threatened  that,  if  they  did  not  stop,  their  supplies 
would  be  cut  off  during  the  long  winter  months.  The  ob- 
ject of  the  Company  "  was  to  prevent  the  Indians  learning 
that  there  was  another  pursuit  whereby  they  would  become 
independent  of  the  Company,  and  cease  to  be  its  hunters."  :* 

They  "  Rob  and  Keep  Us  Poor  " 

"  The  Traders,"  petitioned  Peguis,  Chief  of  the  Salteau 
Tribe,  at  Red  River  settlement,  "  have  never  done  anything 
but  rob  and  keep  us  poor,  but  the  farmers  have  taught  us 
how  to  farm  and  raise  cattle.  .  .  . 

"  We  have  many  things  to  complain  of  against  the  Hudson's 
Bay  Company.  They  pay  us  little  for  our  furs,  and  when 
we  are  old  we  are  left  to  shift  for  ourselves. 

"  We  could  name  many  old  men  who  have  starved  to  death 
in  sight  of  many  of  the  Company's  principal  forts. 

"  When  the  Home  [British]  Government  has  sent  out  ques- 
tions to  be  answered  in  this  Country  about  the  treatment  of 

15  Ibid.,  p.  265.    Testimony  of  John  McLaughlin. 
i«  Ibid.,  p.  389. 


t  125 

Indians  by  the  Company,  the  Indians  have  been  told  that  if 
they  said  anything  against  the  Company  they  would  be  driven 
away  from  their  homes. 

"  In  the  same  way,  when  Indians  wished  to  attach  them- 
selves to  missions,  they  have  been  both  threatened  and  used 
badly.  When  a  new  mission  has  been  established,  the  Com- 
pany has  at  once  planted  a  post  there,  so  as  to  prevent  In- 
dians from  attaching  themselves  to  it.  They  have  been  told 
that  they  are  fools  to  listen  to  missionaries,  and  can  only 
starve  and  become  lazy  under  them.  We  could  name  many 
Indians  who  have  been  prevented  by  the  Company  from 
leaving  their  trading  posts  and  Indian  habits  when  they  wished 
to  attach  themselves  to  missions,"  etc.,  etc.17 

Starvation  and  Cannibalism 

A  pathetic  and  restrained  petition,  this,  it  must  be  ad- 
mitted. But  far  in  the  barren  east  of  Canada  the  same 
practices  had  been  going  on.  A  letter  on  the  condition  of 
the  Indians  in  remote  Labrador,  that  had  been  written  by 
William  Kennedy  to  Lord  Elgin,  Governor-General  of  Canada 
in  1847-1854,  was  produced  before  the  British  Parliamen- 
tary Select  Committee  in  1857.  In  this  letter,  Kennedy  quoted 
from  a  letter  that  had  been  received  by  him. 

"  You  will  be  grieved,"  read  a  passage  in  this  letter,  "  to 
learn  that  the  curse  which  had  effect  in  the  old  country  has 
extended  here,  though  arising  from  causes  of  more  frequent 
occurrence  than  even  the  failure  of  crops. 

17  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Company, 
etc.,  British  Parliament,  1857,  Appendix  No.  XVI,  p.  445.  Chief  Peguis 
sent  with  his  petition  a  letter  he  had  received  from  the  "  Silver  Chief  " 
(Lord  Selkirk)  dated  Fort  Douglas,  July  20,  1817,  highly  commending 
his  (Peguis')  services  to  the  whites  and  his  influence  in  favor  of  the 
settlers.  A  similar  letter  dated  Jan.  i,  1835,  from  Sir  George  Simpson, 
Hudson's  Bay  Company's  Governor  of  Rupert's  Land,  was  enclosed,  in 
which  letter  Simpson  guaranteed  Peguis  an  annuity  of  £5  sterling  a 
year. 


126       t        SOVEREIGNTY   OF    HUDSON'S   BAY   COMPANY 

"  Starvation  has,  I  learn,  committed  great  havoc  among 
your  old  friends,  the  Nascopies,  numbers  of  whom  met  their 
death  from  want  last  winter;  whole  camps  of  them  were 
found  dead,  without  one  survivor  to  tell  the  tale  of  their 
sufferings;  others  sustained  life  in  a  way  most  revolting,  as 
using  as  food  the  dead  bodies  of  their  companions;  some 
even  bled  their  children  to  death,  and  sustained  life  with  their 
bodies!" 

In  another  quoted  letter  of  Kennedy  to  Lord  Elgin  was 
this  announcement,  "  At  Fort  Nascopie  the  Indians  were  dy- 
ing by  dozens  of  starvation;  and  among  others,  your  old 
friend  Paytabais."  In  a  third  quoted  letter  Kennedy  stated, 
"  A  great  number  of  Indians  starved  to  death  last  winter,  and 
says  it  was 's  fault  in  not  giving  them  enough  am- 
munition." 18 

It  is  probable  that  the  William  Kennedy  here  referred  to 
was  Captain  William  Kennedy.  He  was  a  son  of  Alexander 
Kennedy  who  had  been  a  Chief  Factor  of  the  Hudson's  Bay 
Company.  The  dates  of  William  Kennedy's  letters  to  Lord 
Elgin  are  not  given  in  the  records.  Judging  from  the  con- 
text of  his  correspondence,  in  which  references  are  made 
to  the  famine  of  1847  m  Europe,  his  letters  were  written  a 
year  or  two  years  later. 

Sir  George  Simpson,  Governor  of  the  Hudson's  Bay  Com- 
pany, who  at  the  time  was  dubbed  "  King  of  the  Fur  Trade  " 
and  "  Emperor  of  the  Plains,"  styled  these  statements  exag- 
gerated, although  admitting  that  there  had  been  some  recent 
cases  of  cannibalism  in  the  Athabasca  country.19  But  little 

18  The  above  correspondence  is  included  in  the  Report  from  the  Select 
Committee   on  the  Hudson's  Bay  Company,  etc.,  British   Parliament, 
I857,  pp.  82-83.     The  blanks  in  the  final  sentence  appear  in  the  Select 
Committee's  report :  we  are,  therefore,  unfortunately  not  able  to  deter- 
mine the  name  of  the  person  responsible  for  these  atrocities. 

19  Ibid.,  p.  82.     See  his  full  testimony  in  the  Select  Committee's  Re- 
port.    Simpson  was  in  reality  the  viceroy,  if  the  term  may  be  used, 
of  the  Supreme  Council  or  Committee  of  the  Hudson's  Bay  Company 


SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY  127 

or  no  weight,  it  was  not  unreasonably  pointed  out,  could  be 
given  to  Simpson's  word  considering  that  he  testified  that  Fort 
Nascopie  was  on  the  Labrador  Coast  when  in  fact  it  was  400 
mile's  inland.20 


Lord  Strathcona  Begins  His  Career 

At  this  point  authentic  historical  narrative  requires  that  it 
should  be  noted  that  it  was  in  this  identical  Labrador  terri- 
tory, and  at  this  time,  that  the  greatest  and  richest  Canadian 
capitalist  of  present  times  —  Lord  Strathcona  and  Mount 
Royal  —  served  his  apprenticeship  of  13  years  with  the  Hud- 
son's Bay  Company,  and  made  his  first  start  on  the  road  to 
wealth.  He  was  then  Donald  A.  Smith,  a  young  Scotchman, 
and  had  been  assigned,  in  1838,  to  the  Labrador  post  —  •"  the 
bleakest  corner  of  the  earth  "-  -  by  Sir  George  Simpson. 

"  Some  years  before  Mr.  Smith's  arrival,"  says  Beckles 
Willson,  Lord  Strathcona's  laudatory  biographer,  "  the  atten- 
tion of  the  Company  had  been  directed  to  this  bleak  district  as 
a  possible  field  of  lucrative  enterprise.  The  Moravian  mission- 
in  London.  He  had  full  authority  over  all  their  Colonial  possessions, 
and  held  the  office  until  he  died  in  1860  —  a  period  of  nearly  ^40  years. 
He  was  also  a  powerful  bank  magnate,  first  of  the  Bank  of  British  North 
America,  and  from  1859  of  the  Bank  of  Montreal. 

20  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
British  Parliament,  1857,  p.  83.  During  Sir  George  Simpson's  exami- 
nation, a  passage  in  Thomas  Simpson's  Life  of  Thomas  Simpson  was 
pointed  out  to  him.  Thomas  Simpson  was  a  distant  relative  of  Sir 
George  Simpson,  and  for  a  time  had  been  his  private  secretary.  Dealing 
with  conditions  among  the  Indians  in  the  country  between  Winnipeg 
and  Lake  Superior,  the  passage  in  question  stated,  "  Parents  have  been 
known  to  lengthen  put  a  miserable  existence  by  killing  and  devour- 
ing their  own  offspring."  Sir  George  Simpson  in  reply  reflected  upon 
Thomas  Simpson's  judgment  Evidence  was  also  placed  before  the 
Committee  from  Ballantyne's  book  entitled  Hudson  Bay.  Ballantyne 
stated  that  cannibalism  existed  among  the  natives  at  the  Hudson's 
Bay  Company's  posts,  and  instanced  the  case  of  conditions  at  Peel's 
River,  a  post  in  the  Arctic  circle.  Sir  George  Simpson's  chief  defense 
was  to  characterize  these  statements  as  exaggerated. —  Report  from  the 
Select  Committee  on  the  Hudson's  Bay  Co.,  etc.,  p.  84. 


128  SOVEREIGNTY  OF   HUDSON *S   BAY   COMPANY 

aries  among  the  Esquimaux  had  issued  a  pamphlet  in  which, 
after  describing  the  state  of  the  natives,  it  was  stated  that  the 
furs  of  the  fox,  mink  and  martin  had  been  obtained."  At 
first,  the  trade  did  not  seem  promising,  but  Simpson  resolved 
to  persist.  Willson  tells  of  the  wretched  life  led  by  the  Es- 
quimaux in  hunting  for  the  Company,  and  describes  how,  as 
a  reward  for  all  their  toil  and  hardships,  after  some  of 
them  had  spent  two  years  on  their  hunting  journey,  all  that 
they  received  "  was  a  little  tobacco  and  a  few  strings  of  beads, 
very  few  having  the  means  of  procuring  guns  and  ammuni- 
tion." 

Willson  proceeds  to  narrate  the  following  important  par- 
ticulars, evidently  not  knowing  of  the  facts  brought  out  be- 
fore the  British  Parliamentary  Committee  of  1857,  or  if 
knowing  them,  choosing  to  omit  them:  "Donald  [Smith] 
came  ultimately  to  be  stationed  at  Hamilton  Inlet,  where  the 
Company  then  had  two  posts.  .  .  .  He  and  his  comrades  at 
the  post  spent  most  of  their  time  trading  in  furs  with  the 
Indians  —  particularly  the  Mountaineers  and  the  Nascopies." 
After  thus  placing  Mr.  Smith's  early  activities  among  these 
tribes,  Willson  goes  on  to  say  that  before  Smith  had  left 
Labrador  the  Esquimaux  had  all  but  totally  vanished  from  the 
lower  coast.  Willson  tells  how  the  Nascopie  tribe  had  become 
greatly  reduced,  but  explains  the  appalling  mortality  by  say- 
ing that  it  was  due  partly  to  natural  causes  and  partly  to  dis- 
eases contracted  by  contact  with  modes  of  living  of  the  whites 
inducing  respiratory  diseases.21 

Strathcona  in  Labrador 

i 

Dr.  Grenfell  relates  that  it  was  at  the  North  West  River 
post  of  the  Hudson's  Bay  Company  that  Donald  A.  Smith 
spent  his  early  13  years  in  Labrador.  This  post  was  a  con- 

21  See  Beckles  Willson's  Lard  Strathcona,  pp.  21-31. 


SOVEREIGNTY  OF   HUDSON'S   BAY   COMPANY  129 

siderable  distance  in  from  the  coast,  and  was  reached  via 
Hamilton  Inlet.  Fort  Nascopie  lay  some  hundreds  of  miles 
northwest.  "  Early  in  the  last  century,"  says  Grenf  ell  of  the 
North  West  River  post,  "  this  was  an  important  place,  the 
residence  of  the  Chief  Factor  in  charge  of  Labrador."  Al- 
though the  barren  lands  of  Labrador  were  supposed  to  be  un- 
productive, yet,  Grenfell  relates,  "  this  post  had  a  large  farm 
where  oats  and  vegetables  were  grown."  The  remnants  of 
the  Nascopie  tribe  still  come  to  that  post  to  trade  their 
furs.22 

George  Gladman,  whose  father  was  a  Chief  Factor  of  the 
Hudson's  Bay  Company  and  who  himself  had  been  associated 
31  years  as  Clerk  and  as  Chief  Trader  with  that  Company, 
testified  before  the  Select  Committee  of  the  Canadian  Legis- 
lative Assembly,  in  1857 :  "  No  agricultural  settlers  (prop- 
erly so-called)  are  permitted  at  or  near  the  Company's  trading 
stations,  except  Red  River.  Their  stations  are  occupied  solely 
by  the  officers  and  employes  of  the  Company  and  their  fami- 
lies, the  Indians  being  the  only  other  residents  near  the  sta- 
tion." 23 

If  Willson  had  read  the  testimony  before  the  British  Parliar 
mentary  Committee  of  1857,  he  would  doubtless  have  been 
more  cautious  in  too  conspicuously  locating  Lord  Strathcona 
and  Mount  Royal  among  the  Nascopie  tribe,  and  in  admitting 
the  extraordinarily  large  mortality  among  those  Indians ;  for, 
as  we  have  already  cited,  it  was  those  same  Nascopie  Indians 
who  were  terribly  reduced  by  starvation,  and  who  were  forced 
to  the  awful  extremity  of  eating  the  dead  bodies  of  their 
companions,  and  even  to  kill  and  eat  their  own  children! 

It  was  in  such  a  time  and  place  that  Donald  A.  Smith,  later 
created  Lord  Strathcona  and  Mount  Royal  —  Strathcona,  the 

22  Grenf  ell's  Labrador,  the  Country  and  the  People,  p.  142. 

23  Journals  of  the  Legislative  Assembly  of  Canada,  Appendix  to  the 

Vol.,  1857,  Vol.  XV,  No.  4,  Appendix  No.  17. 


I3O  SOVEREIGNTY  OF   HUDSON'S   BAY   COMPANY 

most  powerful  Canadian  capitalist  of  these  times  —  began  and 
flourished.  According  to  Willson,  quoting  from  another 
writer,  Smith  was  rated  a  highly  valuable  employe  of  the  Hud- 
son's Bay  Company  during  the  13  years  he  was  in  service 
in  Labrador  "learning  the  secrets  of  the  Company,  how  to 
manage  the  Indians,  and  how  to  produce  the  best  returns." 
He  showed,  Willson  relates  further,  an  "  invaluable  knack  of 
turning  everything  to  account.  '  No  matter,'  it  has  been  heard 
of  him,  '  however  poor  the  post  might  be,  Donald  Smith  al- 
ways showed  a  balance  on  the  right  side  of  the  ledger.'  He 
was  rewarded,  first  by  a  chief  tradership,  and  after  ten  years 
more  spent  on  the  shores  of  Hudson's  Bay  ...  he  was  ap- 
pointed a  Chief  Factor."  24 

Fortune  From  a  Wilderness 

In  1856,  when  Smith  was  48  years  old,  he  was  chosen  to 
fill  the  post  of  Chief  Executive  Officer  of  the  Hudson's  Bay 
Company  in  North  America,  and  was  stationed  at  Montreal.25 

By  this  time,  it  would  appear,  Donald  A.  Smith's  personal 
fortune  amounted  to  £10,000  or  nearly  $5o,ooo.26  It  need  not 
be  explained  that  such  a  sum  at  that  period  represented  very 
considerable  wealth;  in  purchasing  power  it  perhaps  equaled 
much  more  than  ten  times  that  amount  reckoned  by  present 
standards.  That  in  so  desolate  a  country  as  Labrador,  Don- 
ald A.  Smith  should  have  been  able  to  accumulate  the  greater 
part,  if  not  all,  of  £10,000,  was  regarded  as  convincing  demon- 
stration of  his  tenacious  capacity.  He  was,  in  1857,  it  ap- 
pears, a  stockholder  in  the  Bank  of  Montreal,  as  were  other 

2*Ellice  testified  in  1857  that  the  Chief  Factors  and  the  Chief 
Traders  of  the  Hudson's  Bay  Company  were  paid  in  shares.  The 
Chief  Factors  were  virtually  dictators  in  the  territory  over  which 
they  ruled. 

25  Beckles  Willson's  Lord  Strathcona,  p.  36. 

26  Bryce's  The  Scotsman  in  Canada.    This  is  a  highly  eulogistic  work. 


SOVEREIGNTY   OF   HUDSON'S   BAY   COMPANY  13! 

officers  of  the  Hudson's  Bay  Company ; 27  this  was  the  same 
Bank  of  Montreal  in  which  15  years  later  he  became  so  domi- 
nating a  personage,  and  as  to  one  of  the  transactions  concern- 
ing which  details  are  related  later  in  this  work. 

Of  the  further  career  of  Donald  A.  Smith,  the  superemi- 
nent  Canadian  magnate  and  distinguished  member  of  the  peer- 
age, we  shall  relate  more  hereafter  in  its  chronological  and 
proper  place. 

27  Journals  of  the  Legislative  Assembly  of  Canada,  Appendix  to  the 
iSth  Vol.,  1857,  Vol.  XV,  No.  4,  Appendix  No.  11. 


CHAPTER  IX 

PASSING  OF  THE  HUDSON'S  BAY  COMPANY'S 
SOVEREIGNTY 

At  this  point  the  essential  question  incisively  thrusts  itself : 
What  were  the  definite  results,  in  concrete  currency  form,  of 
these  long-continued  methods?  In  plain,  understandable 
commercial  language,  what  were  the  profits  of  the  Hudson's 
Bay  Company,  which  was  directed  from  London  by  a  sover- 
eign quintet  of  merchants  and  aristocrats? 

The  answer  to  this  question  offers  no  difficulty.  Doctor 
Sir  John  Rae,  who,  for  20  years,  had  been  in  the  Company's 
service  as  medical  officer  at  Moose  Factory  and  in  the  Arctic 
region,  asserted  in  his  testimony  that  the  Company's  employes 
were  forced  to  pay,  on  goods  for  their  own  use,  50  per  cent, 
more  than  the  London  price.  As  for  the  Indians,  they  were 
charged  (in  furs)  more  than  200  per  cent,  in  excess  of  the 
price  that  the  Company  paid  in  London  for  the  goods  which 
it  sold  tMem.  The  Indians,  he  said,  possibly  were  forced 
to  pay  300  per  cent.,  but  it  was  clearly  established  that  they 
had  to  pay  more  than  200  per  cent.1 

David  Gunn,  writing  March  6,  1857,  from  the  Red  River 
Settlement  to  Philip  Vanhoughnet,  President  of  the  Executive 
Council,  at  Toronto,  stated  that  the  price  of  goods  sold  at  the 

1  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
British  Parliament,  1857,  pp.  34  and  500  of  Report  and  Testimony. 
The  story  has  long  been  current  that  the  Hudson's  Bay  Company  in 
exchange  for  old,  long  obsolete  muskets  compelled  the  Indians  to  pile 
the  most  valuable  furs  as  high  as  the  musket.  This  fact,  however, 
does  not  appear  in  the  evidence. 

132 


PASSING   OF   HUDSON'S   BAY   COMPANY^   SOVEREIGNTY         133 

Hudson's  Bay  Company's  stores  there  varied  from  100  to  400 
per  cent,  on  the  prime  cost.  Gunn  further  described  how  by 
decreeing  prices  for  produce,  the  Company  had  the  helpless 
agriculturalist,  who  had  no  other  market,  at  its  mercy;  if  the 
farmer  was  suspected  of  infringing  any  of  the  Company's  many 
privileges,  he  was  cut  off  from  selling  to  the  Company,  and 
there  was  no  market  whatever  for  him.2 


Company's  Large  Profits 

But  what  of  the  Company's  annual  profits?  Ellice  testi- 
fied, in  1857,  that  the  average  annual  profits  for  the  previous 
17  years  had  been  £65,573,  of  which  £39,343  had  been  appro.- 
priated  to  the  profit  of  the  Company  in  England,  and  £26,229 
had  been  annually  appropriated  to  the  Factors  and  Traders 
in  the  interior  of  Canada ;  the  general  profits  of  the  Company 
during  that  period  had  averaged  12  per  cent,  upon  the  cap- 
ital.3 

These  profits,  however,  were  simply  those  extracted  from 
the  fur  traffic.  They  did  not  include  the  profits  from  the 
Hudson's  Bay  Company's  asserted  ownership  of  stupendous 
areas  of  land,  and  from  its  grain,  cattle,  horse,  sheep,  produce, 
fishery  and  timber  lines  of  business.  Immense  quantities  of 
timber  in  British  Columbia  and  Oregon  were  cut  and  sawed 
and  exported  by  the  Company.  It  had  at  this  time  156  estab- 
lishments or  posts,  of  which  12  were  in  Washington  Terri- 
tory and  Oregon,  in  which  territory  it  claimed  proprietary  or 
rather  possessory  rights ;  and,  indeed,  it  subsequently  was  able 

2  Ibid.,  Appendix  No.  VII,  p.  383. 

3  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
British    Parliament,    1857,    p.    326.    From    these    annual    profits    each 
Chief    Factor    received   about    £617   yearly,    and    each    Chief   Trader 
about  £308.    It  may  be  said  that  never  has  there  existed  a  concern 
which  made  economy  such  a  science  as  did  the  Hudson's  Bay  Company. 
Agnes  Laut  tells  in  her  Conquest  of  the  Northwest  (Vol.  II,  p.  392), 
how  it  saved  nails  when  it  could  use  wooden  pegs. 


134     PASSING  OF  HUDSON'S  P.AY  COMPANY'S  SOVEREIGNTY 

to  get  $450,000  in  gold  from  the  United  States,  in  1870,  as 
payment  for  the  surrender  of  those  asserted  rights,  under  a 
treaty  executed  in  1864.* 

From  Newfoundland,  thousands  of  miles  to  the  Pacific 
Coast,  the  Company  had  its  chain  of  trading  posts,  and  it 
even  had  a  trading  post  in  distant  Honolulu.5  Some  of  its 
trading  posts  were  forts,  surrounded  by  grim,  high  palisades, 
flanked  by  bastions,  and  armed  with  cannon  and  with  blunder- 
busses on  swivels,  with  round  shot  and  cannister  handy,  al- 
ways ready  for  instant  action.  Strong  gates  guarded  the 
forts;  and  in  the  bastions,  which  were  usually  three-storied, 
were  ports  and  loopholes  near  which  abutted  stands  contain- 
ing muskets,  bayonets  and  ammunition  ready  for  use.  The 
most  rigid  discipline,  almost  military  in  character,  prevailed 
for  even  the  most  menial  employes.6 

Hosts  Killed  Off  or  Turned  Into  Vagrants 

The  fate  of  vast  numbers  of  Indians  was  graphically  de- 
scribed in  a  memorial  dated  May  18,  1857,  from  the  Commit- 
tee of  the  Aborigines  Protection  Society  to  Henry  Labouchere, 
Chairman  of  the  British  Parliamentary  Select  Committee  on 
the  Hudson's  Bay  Company. 

The  Committee  of  that  Society  stated  that  the  Indians  were 
the  real  producers  of  the  huge  wealth  from  the  fur  trade, 

4  See  U.  S.  Ex.  Doc.  No.  220,  Forty- first  Congress,  Second  Session, 
pp.    1-3.    The    Commissioner    for   Great    Britain   was   John    Rose,    a 
banker  and  Canadian  politician,  to  whom  frequent  reference  will  be 
made  hereafter. 

5  See  enumeration  of  trading  posts  in  British  Part.  Report  of  1857, 
Appendix  No.  2,  pp.  365-367. 

6  All  officers  and  employes  had  to  get  up  with  the  ringing  of  the 
Fort  bell  at  5 130  A.  M.  ;  at  6  A.  M.  instructions  for  the  work  of  the  day 
for  the  various  employes  were  given  by  the  officer  in  charge;   at  8 
A.  M.   breakfast   was    served,   etc.,   etc.     Every   Sunday   morning,   "  all 
hands "   had   to   attend   "  divine   service,"   clergymen  of    different   de- 
nominations alternating. —  See  descriptive  reminiscences  in  British  Co- 
lumbia Year  Book  for  1897. 


PASSING  OF   HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY        135 

estimated  on  competent  authority  at  £20,000,000,  which  had 
already  gone  to  England.  The  aborigines  were  rapidly  wast- 
ing away,  said  the  memorial,  and  it  cited  the  statement  of 
Dr.  McLaughlin,  superintendent  of  the  Hudson's  Bay  Com- 
pany's affairs  west  of  the  Rocky  Mountains,  that  he  believed 
that  nine-tenths  of  the  entire  Indian  population  there  had  been 
swept  away  by  disease,  principally  fever  and  ague. 

"  The  malignancy  of  these  diseases,"  the  memorial  said, 
"  may  have  increased  by  predisposing  causes,  such  as  intem- 
perance and  the  general  spread  of  venereal  [diseases]  since 
their  intercourse  with  the  Europeans,  but  a  more  direct  cause 
of  mortality  was  their  mode  of  treatment." 

Then  describing  how  immense  numbers  of  animals  had 
been  killed,  and  the  increased  difficulty  of  the  Indians  getting 
furs,  the  Committee  of  the  Aborigines  Protection  Society 
stated  that  necessarily  the  Indians  had  a  harder  time  getting 
the  necessities  of  life;  and  when  they  did  get  supplies  from 
the  Hudson's  Bay  Company  it  was  under  a  credit  system  so 
devised  as  to  keep  them  in  debt  to  the  Company. 

It  was  a  fact,  said  the  Committee  further,  that  although 
under  the  system  in  force  "  we  have  given  unlimited  scope  to 
the  cupidity  of  a  Company  of  traders,  placing  no  stint  upon 
their  profits,  or  limits  to  their  power,  the  unhappy  race  we 
have  consigned  to  their  keeping,  and  from  whose  toil  their 
profits  are  wrung,  are  perishing  miserably  by  famine,  while 
not  a  vestige  of  an  attempt  has  been  made  on  the  part  of  their 
rulers  to  imbue  them  with  the  commonest  arts  of  civilized 
life,  or  to  induce  them  to  change  the  precarious  livelihood 
obtained  by  the  chase  for  a  certain  subsistence  derived  from 
cultivation  of  the  soil." 

The  Hudson's  Bay  Company  —  so  concluded  the  memorial 
of  the  Committee  of  the  Aborigines  Society  —  had  been  in 
rigid,  exclusive,  supreme  control  for  two  centuries  with  every 
opportunity  to  uplift  the  Indian.  "  And  yet  what  has  been 


136       PASSING   OF    HUDSON'S   BAY   COMPANY'S   SOVEREIGNTY 

the  result?  The  system  which  has  made  the  Company  pros- 
perous and  powerful,  has  made  the  Indian  a  slave  and  his 
country  a  desert.  He  is  at  this  day  wandering  about  his 
native  land,  without  home  or  covering,  as  much  a  stranger 
to  the  blessings  of  civilization  as  when  the  white  man  first 
landed  on  his  shores.  .  .  ." 7 

Of  the  great  numbers  of  Indians  that  had  once  inhabited 
Canada,  few  remained  in  many  Hudson's  Bay  Company  sec- 
tions in  1857,  compared  to  the  original  population.  The  Es- 
quimaux were  reduced  to  4,000;  in  the  older  parts  of  Canada 
there  were  but  3,000  Indians  frequenting  the  establishments 
of  the  Hudson's  Bay  Company.  The  whole  of  the  tribes  on 
the  plains  numbered  only  25,000.  On  the  east  side  of  the 
Rocky  Mountains  the  Thickwood  Indians,  preserving  them- 
selves in  their  mountain  recesses,  were  much  more  numerous, 
totaling  35,000;  and  in  British  Columbia  and  on  the  North 
West  Coast,  where  exploitation  was  but  comparatively  re- 
cently begun,  there  were  80,000  Indians.  This  made  a  total 
of  147,000  Indians  in  the  Hudson's  Bay  Company's  territory. 
Adding  11,000  whites  and  half  breeds,  the  full  total  of  the 
Company's  "  subjects  "  was  >i  58,000.* 

Enrichment  of  British  Shareholders 

The  £20,000,000  sterling  that  the  fur  trade  had  yielded  to 
British  capitalists  was  distributed  among  a  noted  array  of 
titled  aristocrats,  church  prelates  and  clergymen,  politicians, 
merchants  and  others.  On  the  list  of  the  Hudson's  Bay  Com- 
pany's stockholders  in  or  about  1856,  appeared  the  names  of 
the  Earl  of  Selkirk,  Countess  Lydia  Cavan,  Baron  Wynford, 

7  Report  from  the  Select  Committee  on  the  Hudson's  Bay  Co.,  etc., 
British  Parl.,  1857,  Appendix  No.  XVI,  pp.  441-444. 

8  Ibid.,   Appendix   No.    II,   pp.    365-367.     These   were   the   estimated 
figures  as  nearly  as  was  compatible  with  the  difficulty  of  getting  ac- 
curate returns. 


PASSING   OF   HUDSON'S    BAY    COMPANY'S   SOVEREIGNTY        137 

Viscount  Folkestone,  Sir  George  Sinclair,  Sir  Edmund  An- 
trobus,  Bishop  John  Banks  Jenkinson,  Rev.  Oswald  Littleton 
Chambers,  the  Ellice  family  and  scores  of  other  notables.9 

Considering  that  the  £20,000,000  from  the  fur  trade  were 
profits  flowing  in  during  a  long  period,  it  is  easy  to  see  that 
by  a  multiplying  series  of  investments  and  reinvestments  com- 
pounding continually,  that  sum  really  represented  a  far  larger 
sum;  and  it  may  be  said,  too,  that  with  the  extraordinarily 
large  purchasing  power  of  money  then  —  far  greater  than 
now  —  £20,000,000  was  a  prodigious  amount,  much  greater 
intrinsically  than  even  such  a  large  sum  would  be  in  these 
present  days.  It  has  been  estimated  that  at  least  one-half  of 
the  revenues  of  the  stockholders  of  the  Hudson's  Bay  Com- 
pany have  come  back  to  Canada  for  investment. 

What  the  Company's  profits  were  from  land  and  its  various 
other  lines  of  business  it  is  not  possible  to  say.  We  have  seen 
in  an  earlier  chapter  of  this  work  by  what  means  the  Hud- 
son's Bay  Company,  through  the  Earl  of  Selkirk,  was  alleged 
to  have  obtained  the  far-reaching  and  valuable  lands  of  the 
Salteau  Indians  near  Winnipeg.  Vast  areas  of  the  finest 
agricultural  lands  were  secured  —  fraudulently,  as  the  Sal- 
teau tribe  asserted  —  by  the  payment  of  some  scraps  of  to- 
bacco and  some  grains  of  ammunition. 

For  this  very  land,  it  would  seem,  the  Hudson's  Bay  Com- 
pany charged  settlers  five  shillings  sterling  per  acre ;  and  later 
—  in  1829  —  more  than  doubled  the  price.  But  the  settlers 
threatened  armed  trouble,  and  the  Company  considered  it  ex- 
pedient to  reduce  the  price  to  seven  shillings  six  pence,  at 
which  price  it  remained  for  30  years  or  more.10  This  was 

9  The  full  list  is  given  in  Ibid.,  Appendix  No.  XVII. 

10  David  Gunn  of  the  Red  River  Settlement,  March  6,  1857,  to  Van- 
houghnet,  President  of  the  Executive  Council  at  Toronto,  Ibid.,  Ap- 
pendix No.  VII,  p.  383.     "  Fear,"  wrote  Gunn,  "  made  the  rulers  of  the 
land   pause   on  the  brink  of  the  precipice  to   which  they  had  been 
hastening." 


138     PASSING  OF  HUDSON'S  BAY  COMPANY'S  SOVEREIGNTY 

the  identical  land,  some  20  or  24  miles  in  extent,  of  which 
Chief  Peguis  complained  that  his  tribe  had  been  defrauded. 

If  any  settler  was  in  arrears  for  land,  the  Company  (to 
which,  perforce,  he  was  compelled  to  sell  all  of  his  produce), 
deducted  one-fifth  for  payment  for  the  land,  at  the  same  time 
selling  the  same  produce  to  the  Indians  for  ruinously  exorbi- 
tant sums,  and  charging  the  settler  (as  we  have  seen)  from 
100  to  400  per  cent,  advance  on  the  prime  cost  of  all  goods 
that  he  bought.  Every  employe  of  the  Company,  in  fact, 
was  forced  to  pay  for  50  acres  of  land  before  he  could  come 
to  the  Red  River  Settlement ;  if  he  could  not  pay  cash,  he  had 
to  go  to  Europe  or  remain  in  the  Company's  service  until  he 
had  saved  money  enough  to  pay  for  the  land.11 


Petition  of  575  Settlers 

In  1849  tne  settlers  rose  in  armed  revolt  against  the  Com- 
pany which,  insistently  proclaiming  its  rights  under  the  Charter 
granted  by  Charles  II,  had  "  ruled  with  a  hard  and  heavy 
hand."  The  Company  mollified  its  extortions,  yet  neverthe- 
less, despite  the  Company's  persistent  claims  that  it  was  treat- 
ing the  settlers  fairly,  the  settlers  still  bitterly  complained  that 
extortion  in  various  ways  was  continuing. 

In  1857  a  petition  signed  by  575  settlers  at  the  Red  River 
Settlement  was  sent  to  the  British  Parliamentary  Select  Com- 
mittee. The  petitioners  told  how  the  flattering  promises  of 
the  Earl  of  Selkirk  had  induced  emigrants  to  settle  there. 

"  We  have  paid  large  sums  of  money  to  the  Hudson's  Bay 
Company  for  land,"  the  petition  read,  "  yet  we  cannot  obtain 
deeds  for  the  same.  The  Company's  agents  have  made  sev- 
eral attempts  to  force  upon  us  deeds  which  would  reduce  our- 
selves and  our  posterity  to  the  most  abject  slavery  under  that 
body.  .  .  . 

.,  p.  383. 


PASSING   OF    HUDSON'S   BAY   COMPANY'S   SOVEREIGNTY        139 

Penalties  Against  Freedom  of  Trade 

"  Under  what  we  believe  to  be  a  fictitious  Charter,  but 
which  the  Company's  Agents  maintained  to  be  the  funda- 
mental law  of  Rupert's  Land  [the  whole  of  the  West  and 
•North  West  Territory],  we  have  been  prevented  the  receiving 
in  exchange  the  peltries  of  our  Country  for  any  of  the  prod- 
ucts of  our  labor,  and  have  been  forbidden  giving  peltries 
in  exchange  for  any  of  the  imported  necessaries  of  life,  under 
the  penalty  of  being  imprisoned,  and  of  having  our  property 
confiscated;  we  have  been  forbidden  to  take  peltries  in  ex- 
change for  food  supplied  to  famishing  Indians. 

"  The  Hudson's  Bay  Company's  clerks,  with  an  armed  police, 
have  entered  into  settlers'  houses  in  quest  of  furs,  and  con- 
fiscated all  they  found.  One  poor  settler,  after  having  his 
goods  seized,  had  his  house  burnt  to  the  ground,  and  after- 
wards was  conveyed  prisoner  to  York  Factory. 

"  The  Company's  first  legal  adviser  in  this  Colony  has  de- 
clared our  navigating  the  lakes  and  rivers  between  this  colony 
and  Hudson's  Bay  with  any  articles  of  produce,  to  be  illegal. 
The  same  authority  has  declared  our  selling  of  English  goods 
in  this  colony  to  be  illegal. 

"  On  our  annual  commercial  journeys  into  Minnesota  we 
have  been  pursued  like  felons  by  armed  constables,  who 
searched  our  property,  even  by  breaking  open  our  trunks ; 
all  furs  found  were  confiscated." 

Payments  of  100  to  400  Per  Cent.  Advance 

The  petition  went  on  to  say  that,  "  Thus,  we,  the  inhabit- 
ants of  this  land,  have  been  and  are  constrained  to  behold  the 
valuable  commercial  productions  of  our  country  exported  for 
the  exclusive  profit  of  a  company  of  traders  who  are  strangers 
to  ourselves  and  to  our  country.  We  are  by  necessity  com- 


I4O       PASSING  OF   HUDSON'S   BAY   COMPANY'S   SOVEREIGNTY 

pelled  to  use  many  articles  of  their  importation  for  which  we 
pay  from  100  to  400  per  cent,  on  prime  cost,  while  we  are 
prohibited  exporting  those  productions  of  our  country  and 
industry  which  we  could  exchange  for  the  necessaries  of  life." 
Then  the  petition  proceeded  to  describe  how  the  governors, 
legislators,  judges  and  other  authorities  were  all  Hudson's  Bay 
Company  functionaries  —  governors,  chief  traders  and  chief 
factors  — ;  how  they  were  appointed  by  the  Company,  and 
arbitrarily  imposed  and  enforced  such  taxes  and  prices  and 
decreed  such  offenses  and  punishments  as  suited  the  Com- 
pany's interests.  They  made  the  laws,  judged  the  laws,  and 
executed  their  own  sentences.12 


Individual  Freedom  of  Trade  Demanded 

In  an  age  when  steam  machinery  and  factories  had  already 
been  established  in  Canada,  when  railroads  were  being  built, 
when  the  owners  of  the  thousands  of  lumber,  grist  and  other 
mills  in  Eastern  Canada  were  looking  for  the  widest  outlet 
for  their  products,  and  when  ambitious  traders  were  demand- 
ing the  free  right  to  trade,  it  was  a  logical  development  that 
nascent  capitalism  should  indignantly  complain  of  such  feudal 
and  arbitrary  restrictions  upon  the  freedom  of  trade,  as  their 
interests  conceived  and  demanded  it. 

The  Toronto  Board  of  Trade  vehemently  protested  against 
what  it  termed  this  assumed,  usurped  power  of  a  single  cor- 
poration —  and  "  foreign  "  at  that  —  to  enact  tariffs,  collect 
customs'  dues  and  levy  taxes.  It  derided  what  it  styled  the 
pretended  rights  by  which  the  Hudson's  Bay  Company,  under 
a  charter  granted  by  Charles  II,  nearly  100  years  before 
Canada  had  passed  from  French  control,  assumed  sovereignty 

12  This  petition  appears  in  full  in  Appendix  No.  XV,  Report  from  the 
Select  Committee  on  the  Hudson's  Bay  Co.,  etc.,  British  Parl.,  1857, 
pp.  437-438. 


PASSING   OF   HUDSON  S   BAY    COMPANY  S   SOVEREIGNTY        14! 

over  the  North  West  Territory  and  arbitrarily  exercised  the 
power  to  grant  away  and  sell  lands  belonging  to  the  Govern- 
ment.13 The  Toronto  Board  of  Trade's  petition  dwelt  with 
emphasis  on  this  point. 

When  testifying  before  the  Canadian  Legislative  Select 
Committee,  in  1857,  Allan  MacDonell  gave  a  long  list  of  facts 
tending  to  prove  the  illegality  of  the  Company's  charter. 
"  The  very  foundation  for  the  Charter  is  a  grant  of  territory 
presumed  to  have  been  made  in  the  year  1670.  Now  as 
Charles  II  could  not  grant  away  what  the  Crown  of  England 
did  not  possess,  much  less  could  grant  away  the  possessions 
of  another  power,  the  very  words  of  the  charter  itself  excludes 
from  the  operation  of  the  grant  those  identical  territories 
which  the  Hudson's  Bay  Company  now  claim." 

These  further  representations  were  brought  out  in  the  Par- 
liamentary Investigation:  —  The  Hudson's  Bay  Company  did 
not  enter  the  valley  of  the  Saskatchewan  until  about  the  year 
1793,  and  did  not  plant  its  establishments  in  the  valley  of  the 
Assiniboine  until  about  1805,  more  than  a  hundred  years  after 
the  date  of  its  charter.  It  did  not  set  up  exclusive  rights  un- 
til i8i4.14  William  Mac  D.  Dawson,  head  of  the  Woods  and 
Forests  Branch  of  the  Crown  Land  Department  at  Toronto, 
testified  that  his  investigations  had  disclosed  that  the  Hud- 
son's Bay  Company  had  no  real  title  in  the  Red  River  and 
the  Saskatchewan  country ;  that  "  it  was  a  monstrous  imposi- 
tion and  was  first  assumed  under  Lord  Selkirk."  Dawson 
also  testified  that  when  the  Company  carried  their  trade  into 
the  interior,  "  they  also  gave  out  that  it  was  their  country  (a 
fiction  which  the  license  of  exclusive  trade  helped  them  to 
maintain)  ;  and  they  industriously  published  and  circulated 
maps  of  it  as  such,  which  being  copied  into  other  maps  and 

13  Appendix  No.  XII,  Ibid.,  p.  435.     Petition  of  Board  of  Trade  of 
Toronto  to  the  Legislative  Council  of  Canada,  April  20,  1857. 

14  Ibid.,  Appendix  No.  VIII,  p.  387. 


142       PASSING   OF   HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY 

geographical  works,   the   delusion  became   very   general,   in- 
deed." 15 

Promises  to  Reform 

The  disclosures  laid  bare  by  this  accumulation  of  testi- 
mony, letters,  petitions,  memorials  and  other  evidence  pro- 
duced before  the  Parliamentary  Select  Committee,  made  the 
deepest  kind  of  a  public  sensation.16  For  nearly  two  centuries 
the  Hudson's  Bay  Company  had  represented  itself  in  England 
as  the  grand  evangel  of  religion,  colonization,  and  civilization 
among  the  Indians;  for  nearly  two  centuries  it  had  assidi- 
ously  spread  abroad  its  pretended  reputation ;  and  by  insisting 
long  enough  upon  its  assumed  virtues  had  been  credited  with 
them  by  the  large  mass  of  unknowing.  Now  the  truth  was 
revealed,  and  bad  as  it  was,  yet  it  was  regarded  as  undoubtedly 
only  part  of  the  whole. 

Imminently  threatened,  as  the  Hudson's  Bay  Company  now 
was,  with  judicial  and  legislative  extinction,  it  had  to  adopt 
some  hurried  expedient  to  save  itself.  Thereupon,  with  the 
most  solemn  assurances  and  the  most  plausible  address,  it 
announced  that  such  "  abuses  "  would  be  no  longer  counte- 
nanced, and  it  pledged  "  its  faith  "  to  the  British  Parliament, 
in  1857,  that  it  would  at  once  institute  certain  definite  reforms 
in  its  territory  in  Canada.  What  these  promises  came  to  we 
shall  soon  see. 

With  its  powerful  ramifications  of  interest  among  mer- 
chants, clergy,  bankers,  politicians  and  titled  aristocrats  in 

15  Ibid.,  p.  394- 

16  By  "  public  sensation  "  is  meant  merely  among  that  part  of  the  peo- 
ple having  no  direct  pecuniary  interest  in  trade  and  commerce.    The 
trading  class,  with  all  its  aristocratic  auxiliaries,  sought  to  minimize 
the  horrors,  and  to  justify  the  "  exigencies  of  trade  "  on  the  score  of 
their  "  adding  to  the  wealth  of  England."     While  one  branch  of  the 
English  trading  class  was  benefiting  from  the  exploitation  in  Canada, 
other    branches    were    pocketing    profits     from    that    in     India    and 
elsewhere,  from  the  opium  traffic  in  China  and  from  the  horrors  of 
the  factory  system  in  England  itself. 


PASSING   OF    HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY        143 

England,  the  Hudson's  Bay  Company  was  even  able  to  get, 
on  the  whole,  by  no  means  unfavorable  recommendations  from 
the  Select  Parliamentary  Committee.  This  Committee  recom- 
mended that  Vancouver  Island  be  given  up  by  the  Hudson's 
Bay  Company;  that  its  privileges  west  of  the  Rocky  Moun- 
tains should  cease,  and  that  just  as  soon  as  Canada  could  make 
arrangements  to  take  over  the  Government  of  that  immense 
northwestern  area  of  land  called  Indian  Territory,  tfaat  terri- 
tory should  be  ceded.  But,  "  to  avoid  the  demoralization  of 
Indians  by  rival  traders  "  that  country  was  meanwhile  to  be 
left  in  control  of  the  Hudson's  Bay  Company. 

Waters  Its  Stock 

To  narrate  the  immediate  sequel  we  shall  now  turn  to  the 
communication  of  Sir  George  E.  Cartier  and  William  Mac- 
dougall,  Commissioners  in  London  for  Canada,  to  Sir  F. 
Rogers  —  a  document  dated  February  8,  1869.  This  com- 
munication showed  how  the  Hudson's  Bay  Company,  in  ex- 
change for  the  proposed  relinquishment  of  its  antiquated  title, 
tried  to  get  from  Canada  the  sum  of  £2,000,000  sterling 
($10,000,000)  and  one  half  of  all  of  the  territory  that  it  was  to 
surrender.  This  communication  further  revealed  that  the 
Company  was  subjected  to  a  peremptory  refusal,  but  that  it 
did  succeed  in  getting  £300,000  sterling  ($1,500,000)  and  one- 
twentieth  of  all  of  the  extraordinary  fertile  expanse  from  the 
Red  River  to  the  Rocky  Mountains.  In  addition,  it  was  al- 
lowed to  retain  the  land  around  its  trading  posts  —  an  in- 
calculably rich  present,  as  we  shall  see,  of  itself. 

Commissioners  Cartier  and  Macdougall  reported  that  Ellice 
was  for  many  years  "  the  ruling  spirit  of  the  Company,"  and 
that  the  Company  had  avowed  its  belief  "  that  colonization  and 
the  fur  trade  could  not  exist  together."  It  was  not  astonish- 
ing "  that  the  Company  had  always  cherished  the  latter,  which 


144     PASSING  OF  HUDSON'S  BAY  COMPANY'S  SOVEREIGNTY 

was  profitable,  and  discouraged,  and  as  far  as  possible,  pre- 
vented the  former." 

The  Company,  the  Commissioners  went  on,  was  recon- 
structed in  1863  with  loud  promises  of  a  new  policy;  great 
assurances  were  held  out  by  it  that  it  would  reform  its  prac- 
tices. "  The  stock  of  the  old  Company,  worth  in  the  market 
about  £1,000,000,  was  bought  up  and  by  some  process  which 
we  are  unable  to  describe,  became  £2,000,000.  A  show  of 
anxiety  to  open  postal  and  telegraphic  communication  was 
made,  and  '  heads  of  proposals '  were  submitted  to  the  Gov- 
ernments of  Canada  and  British  Columbia,  which  on  exam- 
ination were  found  to  embrace  a  line  of  telegraph  only,  with 
the  modest  suggestion  that  the  two  Governments  should  guar- 
antee the  Company  a  profit  of  not  less  than  4  per  cent,  on 
their  expenditure!  A  proposal  so  absurd  could  only  have 
been  made  to  be  rejected,  and  it  was  rejected  accordingly." 
The  Commissioners  continued: 

Promises  Never  Carried  Out 

"  The  surplus  capital  of  the  reconstructed  Company,  which 
was  called  up  for  the  avowed  purpose  of  opening  their  terri- 
tories to  '  European  colonization,  under  a  liberal  and  sys- 
tematic scheme  of  land  settlement '  has  never  been  applied  to 
that  purpose.  Five  and  a  half  years  have  passed  since  the 
grand  scheme  was  announced  to  the  world,  but  no  European 
emigrants  have  been  sent  out,  no  attempts  to  colonize  have 
been  made."  The  Commissioners  added  that  by  a  formal  vote 
of  the  Company's  shareholders  in  November,  1866,  the  policy 
of  colonization  was  absolutely  and  definitely  condemned. 

When  the  matter  of  the  relinquishment  of  its  territory  by 
the  Hudson's  Bay  Company  came  up  definitely,  this,  accord- 
ing to  the  report  of  Canada's  Commissioners,  is  what  hap- 
pened :  — 


PASSING   OF   HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY        145 

Terms  Demanded  by  the  Company. 

The  Company  wanted,  in  1863,  "  in  fee  simple,  half  of  the 
land  proposed  to  be  surrendered  with  various  conditions,  in- 
cluding a  guarantee  by  the  Governments  of  Canada  and  Brit- 
ish Columbia  of  an  annual  profit  on  the  Company's  expendi- 
tures for  improvements  on  their  own  property! 

"  In  1864,"  the  Report  went  on,  "  these  conditions  took  the 
form  of  a  demand,  first,  to  be  paid  £1,000,000  sterling  from 
sales  of  lands  and  mines,  with  large  reservations  *  to  be  se- 
lected by  them/  etc.;  and  secondly,  to  be  paid  £1,000,000 
sterling  in  cash  with  other  terms  and  restrictions  favorable  to 
the  Company. 

"  In  1868,  these  conditions  for  the  surrender  of  territorial 
and  governing  rights  over  the  whole  territory,  remained  at 
£1,000,000,  as  in  the  first  proposition  of  1864,  with  large 
reservations  of  land  at  '  selected  points/  specially  exempted 
from  taxation,  with  full  liberty  to  carry  on  their  trade  free 
from  the  export  and  import  duties,  to  which  all  other  sub- 
jects of  Her  Majesty  in  that  country  would  be  exposed." 
Commissioners  Cartier  and  Macdougall  described  the  grave 
doubts  existing  as  to  the  legality  of  the  Company's  charter.17 

Gets  £300,000  and  Vast  Areas  of  Land 

After  the  foregoing  proposals  had  been  rejected,  an  ar- 
rangement was  finally  made  in  1868-1869.  The  Hudson's 
Bay  Company  received  £300,000  ($1,500,000)  in  cash.  It  also 
was  allowed  to  retain  the  land  —  an  area  of  50,000  acres  — 
around  the  various  trading  posts,  and,  in  addition,  two  sec- 
tions in  every  township,  making  a  reservation  of  one-twentieth 

17  The  full  communication  of  Commissioners  Cartier  and  Mac- 
dougall was  published  in  Sessional  Paper,  No.  25,  Sessional  Papers, 
Dom.  Parl.,  Vol.  II,  No.  5,  1869. 


146       PASSING   OF   HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY 

of  the  entire  region  in  the  fertile  belt  from  the  Red  River  to 
the  Rocky  Mountains.  For  this  cash  payment  and  land  grant 
the  Company  consented  to  surrender  to  the  Government  its 
trade  monopoly  and  all  its  claims.  In  1870  Manitoba,  Ru- 
pert's Land  and  the  North  West  Territories  were  formally  de- 
clared part  of  the  Dominion  of  Canada. 

Meanwhile,  however,  the  rebellion  of  Half  Breeds  and  In- 
dians had  begun.  There  were  those  who  openly  charged  that 
furious  at  not  being  consulted  on  the  terms  of  settlement, 
certain  officers  and  factors  of  the  Hudson's  Bay  Company  in 
Canada  (who  were,  in  a  sense,  partners  and  who  were  opposed 
to  the  settlement  as  it  meant  considerable  loss  to  them),  were 
secret  abettors  of  this  rebellion  in  1869-1870.  This  rebellion, 
led  by  Louis  Kiel,  centered  about  Winnipeg.  Thither  Sir 
Donald  A.  Smith  —  he  was  now  a  Sir  —  the  head  officer  of 
the  Hudson's  Bay  Company,  was  sent  by  the  Canadian  Gov- 
ernment as  Special  Commissioner.  Although  there  were  dis- 
tinct economic  causes  behind  this  rebellion,  it  may  be  added 
here  that  Smith  later  had  to  face  serious  taunts  in  the  Do- 
minion House  of  Commons  when  he  was  a  member  of  that 
body. 

It  was  during  the  debates  in  the  Dominion  House  of  Com- 
mons, in  1875  and  1876,  that  Smith,  then  a  member  of  the 
House,  felt  called  upon  to  answer  certain  charges.  In  a  pub- 
lished statement,  W.  B.  O'Donohue,  one  of  the  leaders  of  the 
insurrection,  in  effect  charged  that  while  employed  on  a  con- 
fidential mission  for  the  Canadian  Government,  Smith  had 
betrayed  his  trust.  O'Donohue  further  specifically  charged 
that  "  the  insurrection  was  advised  by  Governor  William  Mac- 
Tavish,  who,  with  other  officers  of  the  Hudson's  Bay  Com- 
pany, also  aided  and  abetted  it  from  its  inception  to  the  very 
hour  it  ceased  to  exist,"  and  that  Donald  A.  Smith  had  rec- 
ognized the  Rebel  Government.  Smith,  on  April  2,  1875,  gave 
a  long  explanation  denying  these  allegations. 


PASSING   OF   HUDSON'S   BAY   COMPANY'S   SOVEREIGNTY        147 

Charged  with  Aiding  Kiel's  Rebellion 

John  Christian  Schultz  who  had  been  on  the  Council  for  the 
North  West  Territories,  who  was  now  a  member  of  Parlia- 
ment and  who  later  became  Lieutenant-Governor  of  Mani- 
toba, engaged  in  a  very  bitter  and  personal  debate  with 
Smith.  It  was,  said  Schultz,  the  general  belief  that  the  papers 
of  the  Provisional  or  Rebel  Government  had  been  destroyed 
by  the  Hudson's  Bay  Company,  and  he  (Schultz)  believed  the 
statement  to  be  correct.  Smith  then  gave  his  explanation,  in 
which  he  denied  that  these  papers  were  valuable.18  The  next 
year  —  on  March  23,  1876,  Schultz  returned  to  the  attack,  and 
submitted  an  affidavit  of  John  Bruce,  the  first  President  of 
the  Provisional  Government  of  the  North  West,  in  which 
document  Bruce  stated  that  he  had  been  frequently  accustomed 
to  go  to  Governor  MacTavish  of  the  Hudson's  Bay  Company 
for  advice,  and  that  MacTavish  had  told  him  that  it  would  be 
well  to  resist  the  Canadian  Governor,  and  "  that  it  was  an  in- 
justice to  the  people  the  Canadians  taking  possession  of  the 
country,  and  an  injustice  to  the  officers  of  the  Hudson's  Bay 
Company,  because  the  Government  had  given  them  no  part 
of  the  £300,000  paid  for  their  country."  19  Smith  again  de- 
nied that  he  helped  the  insurrection. 

It  was  during  this  day's  debate  that  Schultz  said :  "  The 
House  must  be  aware  that  this  Company  had  made  a  large 
claim  against  the  Government  for  compensation  for  losses  dur- 
ing the  rebellion.  If  the  Hudson's  Bay  Company  were  not 
guilty  of  complicity  during  the  rebellion  they  were  entitled 
to  compensation  for  their  losses  the  same  as  anyone  else,  but 
it  seemed  that  their  guilt  was  now  confessed  in  the  fact  that 
they  did  not  now  dare  to  push  their  claim ;  and  that  even  his 

18  Debates  in  the  House  of  Commons,  Dom.  Parl.,  1875,  pp.  1060- 
1069. 

19  Debates  in  the  House  of  Commons,  etc.,  1876,  pp.  811-812. 


148        PASSING   OF   HUDSON'S   BAY    COMPANY'S   SOVEREIGNTY 

hon.  friend  from  Selkirk   [Donald  A.  Smith],  brazen  as  he 
was  in  other  respects,  did  not  dare  say  a  word  about  it."  20 

Not  until  this  so-termed  rebellion  was  put  down  and  the 
transfer  completely  made,  did  the  Canadian  Government  pay 
the  $1,500,000  cash  to  the  Hudson's  Bay  Company.  The 
Company's  officials  in  Canada,  thanks  greatly  to  Smith's  ef- 
forts,21 succeeded  in  getting  their  part  of  the  payment;  the 
English  stockholders  wanted  to  monopolize  the  whole  sum, 
but  the  Company's  officials  in  Canada  carried  their  point.  A 
sum  of  £107,000  was  divided  among  them  in  consideration  of 
the  relinquishment  of  their  claims. 

Company's  Immense  Land  Possessions 

By  this  final  settlement  the  Hudson's  Bay  Company  was 
left  in  possession  —  or  at  least  with  a  title  to  —  immense  areas 
of  land  in  Manitoba,  Saskatchewan  and  Alberta  and  elsewhere 
—  one-twentieth  of  that  entire  region  of  rich  and  valuable 
agricultural  land.  Its  land  possessions  also  comprised  great 
and  valuable  tracts  in  what  are  now  large  cities;  the  Com- 
pany's landed  estate  in  Winnipeg,  Edmonton  and  other  cities 
is  of  enormous  value ;  and  it  has  already  derived  vast  revenues 
from  the  sale  of  only  a  part  of  those  landed  properties. 

Leaving  aside  its  revenues  from  the  sale  of  its  farming 
lands  before  1893,  its  returns  since  that  date  to  1912,  from 
the  sale  of  1,953,567  acres  of  agricultural  lands,  were  $15,- 
627,944. 22  The  Company's  annual  report  of  March  31,  1912, 
showed  that  the  Company  still  owned  4,032,860  acres  of  un- 
sold land,  and  that  it  was  getting  an  average  of  $19.01  an  acre 
for  its  agricultural  lands.23  It  distributes  annually  among  its 
stockholders  the  rich  sum  of  an  average  of  $2,000,000,  con- 

20  ibid.,  p.  813. 

21  Begg's  History  of  the  North  West,  Vol.  II,  p.  402. 

22  Annual  Report,  Dep't.  of  the  Interior,  March  31,  1912,  p.  xxiv. 

23  Appendix  to  Canadian  Annual  Financial  Review,  Nov.  1912,  p.  130. 


PASSING   OF    HUDSON'S    BAY    COMPANY'S   SOVEREIGNTY        149 

stituting  the  revenues  from  its  fur  land  and  operations;  for 
although  the  Hudson's  Bay  Company  has  gradually  evolved 
into  a  modern  storekeeping  corporation  to  supply  the  needs 
of  settlers  from  its  department  stores  in  a  dozen  or  more 
cities,  it  still  is  pursuing  the  fur  trade  as  it  did  more  than  two 
centuries  ago.  Only  recently  —  in  November,  1913  —  it  added 
$1,000,000  to  its  capital  stock. 

Such  is  a  summary  of  the  operations  of  the  Hudson's  Bay 
Company,  still  a  powerful,  aggressive  institution,  still  o.btain- 
ing  wealth  from  Canada,  still  ruled  from  England  by  a  small 
Council  at  the  head  of  which  is  Lord  Strathcona  and  Mount 
Royal,  formerly  plain  Mr.  Donald  A.  Smith. 

The  surrender  of  its  sovereignty  in  1869  left  most  of  the 
vast  territory  over  which  it  had  long  dictated  open  to  settle- 
ment and  to  unhindered  development  and  exploitation.  How, 
when  the  ink  had  hardly  dried  on  the  surrender  papers,  rail- 
road and  other  capitalists,  chief  among  whom  was  Donald  A. 
Smith,  hastened  to  reach  out  and  get  immense  land  grants, 
great  coal  mines,  timber  and  other  resources,  we  shall  presently 
note  in  detail. 


CHAPTER  X 
INCEPTION  OF  THE  RAILROAD  POWER 

The  railways  of  Canada,  owned,  controlled  and  ruled  pri- 
vately by  individual  groups  or  corporations  of  capitalists,  cover 
more  .than  26,000  miles  of  lines ;  and  expressed  in  the  sub- 
stance of  modern  money  terms,  their  capital  is  about  $1,600,- 
000,000.  But  the  real  amount  upon  which  interest  and  divi- 
dends must  be  paid  is  $2,918,055,699. 

These  are  the  privately-owned  railway  systems,  but  this  is 
not  to  say  that  their  proprietorship  has  come  from  the  applica- 
tion of  private  cash.  The  funds  that  paid  for  their  construc- 
tion have  come  largely,  if  not  fundamentally  in  whole,  from 
the  ever-accessible  public  treasury  which  the  railway  pro- 
moters early  began  to  plunder,  extending  and  elaborating  the 
process  with  time  and  opportunity. 

Vast  Gifts  of  Land,  Cash  and  Guarantees 

The  public  finances  have  been  placed  at  the  disposal 
of  railway  promoters  in  three  principal  forms.  Cash  sub- 
sidies, comprising  either  outright  cash  or  loans  has  been  one 
method;  land  grants,  another;  and  guarantees  of  bonds,  a 
third.  The  first  two  were  the  main  ways  in  the  early  decades 
of  railroad  history ;  the  last-named  is  an  outgrowth  of  the 
financial  methods  of  more  recent  years.  All  three  come  under 
the  official  designation  of  "  Government  aid,"  the  tabulated 
aggregate  of  which,  to  this  present  writing  (1913),  has 
reached : 

150 


INCEPTION   OF   THE   RAILROAD    POWER  151 

Land  grants   56,052,055  acres 

Cash  subventions   $244,000,000 

Guarantees  of  bonds $245,000,000 

According  to  an  estimate  made  by  Mr.  R.  D.  Fairburn  in 
a  paper  read  at  a  recent  convention  of  the  Canadian  Manu- 
facturers' Association  at  Halifax,  these  56,052,055  acres,  if 
appraised  at  $20  per  acre,  produce  a  total  amount  of  $1,121,- 
041,100.  In  arriving  at  this  estimate  Mr.  Fairburn  pointed 
out  that  the  Canadian  Northern  Railway  reported  an  average 
price  for  its  lands  of  $45.17  per  acre.  "  Thus,"  he  said,  includ- 
ing the  cash  subsidies  granted  up  to  1912,  "  we  have  given  to 
the  railways  $1,320,113,173  or  about  $50,000  per  mile." 

But  this  estimate  hardly  expresses  the  total  value  of  the 
land  grants,  which  comprised,  in  some  cases,  great  areas  of 
timber  lands;  in  other  cases,  the  most  enormously  valuable 
coal  and  other  mineral  deposits.  Of  the  total  of  the  profits 
drawn  from  these,  and  their  entire  present  and  potential  com- 
mercial value,  no  accurate  computation  can  be  given. 

These  land  grants,  however,  by  no  means  include  the  city 
or  town  terminal  land  and  water  facilities  donated  during  the 
last  sixty  years  by  municipalities  to  railway  promoters  for 
stations,  freight  depots,  entrances  and  exits  and  other  pur- 
poses. The  aggregate  value  of  these  may  be  reasonably  said 
to  be  stupendous. 

A  fraction  more  than  31,000,000  acres  of  the  56,052,055 
acres  in  land  grants  were  donated  by  the  Dominion  Govern- 
ment; the  Government  of  the  Province  of  Quebec  gave  13,- 
625,949  acres:  that  of  British  Columbia,  8,119,221  acres;  the 
New  Brunswick  Government,  1,647,772  acres;  that  of 
Nova  Scotia,  160,000  acres,  and  that  of  Ontario,  635,039 
acres.1  Of  the  Dominion  land  grants  one  railroad  alone  — 

1  See  1912  and  1913  Railway  Statistics  of  the  Dominion  of  Canada, 
etc.,  p.  xvi,  etc. 


152  INCEPTION   OF   THE   RAILROAD   POWER 

the  Canadian  Pacific  —  received  a  present  of  25,000,000 
acres.2 

Of  the  $244,000,000  contributed  in  cash  subventions,  or 
their  equivalent  in  so-called  loans,  the  Dominion  Government 
has  given  about  $i9O,ooo,ooo.3  The  Provincial  governments 
have  given  nearly  $36,000,000,  and  municipalities  $18,000,000 
in  cash  subsidies.  This  aid  has  been  largely  outright  cash 
donations;  only  a  small  part  has  been  in  the  nominal  form  of 
loans  or  subscriptions  to  shares,  which  have  practically  turned 
into  gifts. 

As  for  the  guaranteeing  of  bonds  of  privately-owned  rail- 
ways by  the  Dominion  Government  or  the  Provincial  govern- 
ments, the  guarantees  have  been : 

Dominion    $  91,982,553 

Manitoba    20,899,660 

Alberta    45,489,000 

Saskatchewan 32,500,000 

Ontario   7,860,000 

Nova  Scotia 5,022,000 

British   Columbia    38,946,832 

New  Brunswick 1,893,000 

Quebec 476,000 


Total $245,070,045 

In  the  single  year  of  1912,  bond  guarantees  were  increased 
by  the  sum  of  $96,733,688,  bringing  the  amount  from  $148,- 
336,357  in  1911  to  the  above  stated  total  in  1912. 

2  Minus  6,793,014  acres  for  the  relinquishment  of  which  the  Canadian 
Pacific  Railway  Company  received  $10,189,521  fronfthe  Dominion  Gov- 
ernment. 

3  See  1912  and  1913  Railway  Statistics  of  the  Dominion  of  Canada; 
p.  xvi,  etc.    To  the  sum  stated  in  this  report,  we  have  added  the  sub- 
sidies voted  during  the  1913  session  of  Parliament,  including  the  ten- 
year  loan  of  $15,000,000  at  4  per  cent,  to  the  Grand  Trunk  Pacific 
Railway  Company  which  loan  may  turn  out  to  be  a  gift. 


INCEPTION   OF   THE   RAILROAD   POWER  153 

Besides  the  foregoing  sums,  the  Dominion  Government  has 
spent  more  than  $116,000,000  in  constructing  the  eastern  di- 
vision of  the  National  Transcontinental  Railway,  of  which 
the  Grand  Trunk  Pacific  Railway  Company  will  have  the  free 
use  for  the  first  seven  years  of  a  lease  of  50  years. 

All  of  the  sums  above  given  are  exclusive  of  the  great  sums 
spent  on  the  construction  or  acquisition  of  what  are  Gov- 
ernment-owned railways.  Of  these  expenditures  the  Inter- 
colonial Railway  system  cost  nearly  $95,000,000.* 

The  Original  Promoters 

With  this  preliminary,  we  shall  now  proceed  to  narrate 
certain  facts  pertaining  to  the  inception  of  Canada's  railways. 

nThe  prime  and  first  consideration  of  railway  ownership  was 
:he  ability  to  get  legislation  giving  certain  definite  rights  and 
privileges.  This  legislation  conferred  what  was  called  a  char- 
ter of  incorporation.  Having  the  power,  as  the  legislative 
politicians  did,  to  grant  to  themselves  these  charters,  it  was 
not  an  astonishing  outcome  that  the  promoters  should  have 
so  often  been  the  politicians  themselves.  This  was  partic- 
ularly so  inasmuch  as  many  of  the  politicians,  then-  so-called, 
were  not  politicians  in  the  sense  that  they  exclusively  followed 
politics.  Not  a  few  of  them  were  landowners  of  consider- 
able holdings,  and  it  was  not  a  far  step  for  them  to  promote 
railways,  the  operation  of  which  would  increase  the  value  of 
their  timber  and  other  lands.  Other  members  of  Parliament 
were  traders,  merchants  or  shippers,  as  well  as  land  specula- 
tors, and  had  a  personal  and  immediate  interest  in  bringing 
about  modern  methods  of  transportation.  Still  other  members 
of  Parliament  were  lawyers,  who  were  either  connected  with 
landed  or  trading  families,  or  who  were  often  themselves  in- 
terested in  capitalist  undertakings  or  aspired  to  become  so. 
*  Annual  Report  of  the  Dep't.  of  Railways  and  Canals,  1912,  p.  53. 


154  INCEPTION   OF   THE   RAILROAD   POWER 

At  the  same  time,  the  parliamentary  railroad  promoters  were 
compelled  by  the  exigencies  of  politics  to  put  on  an  appear- 
ance of  great  concern  for  the  public  welfare  while  engaged  in 
the  very  act  of  seeking  to  enrich  themselves ;  they  assiduously 
presented  themselves  as  law  makers  having  at  heart  the  de- 
velopment of  the  resources  of  Canada  and  the  expansion  of 
its  wealth. 

To  comprehend  the  large  and  important  part  the  parlia- 
mentary legislators  took  as  personal  beneficiaries  in  the  orig- 
inal promotion  of  railways,  it  is  only  necessary  to  survey  the 
lists  of  incorporators  of  the  first  railroads. 

Politicians  Were  Business  Men 

The  promoters  of  the  London  and  Gore  Railroad  Company, 
chartered  in  1834,  were  headed  by  Allan  N.  MacNab,  and 
comprised  a  large  contingent  of  the  most  prominent  legisla- 
tive and  other  politicians.  This  railroad  subsequently  de- 
veloped into  the  Great  Western  Railway  of  which  MacNab 
became  president.  To  this  generation,  MacNab's  name  is  ob- 
scure, but  in  his  day  he  was  a  conspicuous  personage  —  member 
of  the  Canadian  Parliament  for  many  years,  Speaker  of  that 
body  for  a  long  time,  created  a  knight,  Prime  Minister  in 
1854,  raised  to  a  baronetcy  in  1856  —  altogether  a  command- 
ing dignitary  whose  daughters  married  into  the  British  titled 
aristocracy. 

The  original  object  of  a  number  of  the  first  railroad  com- 
panies was  neither  the  settlement  of  the  country  nor  the 
transportation  of  passengers,  but  was  chiefly  one  of  reaching 
the  lumber  and  other  resources  of  what  were  then  the  back- 
woods regions.  In  this  category  of  railways  was  the  Cobourg 
and  Peterboro  Railway,  constructed  chiefly  to  transport  lum- 
ber, flour  and  other  products,  and  with  specific  powers  in  its 
charter  to  build  an  extension  to  the  Marmora  Iron  Works. 


INCEPTION   OF   THE   RAILROAD   POWER  155 

According  to  Lord  Sydenham,  Governor-General  of  Can- 
ada, the  proceedings  of  the  Canadian  Parliament  were  far 
from  being  characterized  by  that  considerate  and  polite  reci- 
procity and  discretion  that  might  have  been  expected.  "  You 
can  form  no  idea,"  wrote  Sydenham  in  a  private  letter  to  Lord 
John  Russell  of  the  British  Government,  in  1840,  "  of  the 
manner  in  which  a  Colonial  Parliament  transacts  its  business. 
I  got  them  into  comparative  order  and  decency  by  having 
measures  brought  forward  by  the  Government,  and  well  and 
steadily  worked  through.  But  when  they  came  to  their  own 
affairs,  and,  above  all,  to  the  money  matters,  there  was  a  scene 
of  confusion  and  riot  of  which  no  one  in  England  can  have 
any  idea.  Every  man  proposes  a  vote  for  his  own  job;  and 
bills  are  introduced  without  notice,  and  carried  through  all 
their  stages  in  a  quarter  of  an  hour !  .  .  ."  5 

Beneficiaries  Were  Highest  Dignitaries 

The  members  of  the  Canadian  Parliament  benefiting  by 
charter  and  other  grants  were  not  merely  ordinary  members. 
The  chief  beneficiaries  often  were  the  foremost  members  — 
men  who  were  leaders,  or  who  evolved  into  leaders  of  politi- 
cal parties,  or  who  became  Cabinet  Ministers  or  Prime  Min- 
isters. 

We  have  already  mentioned  Sir  Allan  N.  MacNab;  he,  for 
a  considerable  time,  was  Chairman  of  the  Legislative  Assem- 
bly Standing  Committee  on  Railroads  of  which  Sir  Francis 
Hincks,  J.  Cauchon  and  other  conspicuous  railway  promoters 
were  also  members.  Another  prominent  parliamentary  rail- 

5  Adam  Shortt's  biography  Lord  Sydenham,  p.  251.  Lord  Sydenham 
was,  no  doubt,  impressed  by  their  primitively  uncouth  methods  as  com- 
pared with  those  in  England,  where  the  most  flagrant  jobs  are  put 
through  with  polished  ease  and  leisurely  equanimity,  thus  covering 
them  with  a  nice  gentlemanly  elegance.  Centuries  of  experience  have 
taught  this  as  a  fine  art. 


156  INCEPTION    OF   THE   RAILROAD   POWER 

road  promoter  was  Malcolm  Cameron,  who,  going  to  Parlia- 
ment in  1836,  remained  there  for  more  than  a  quarter  of  a 
century,  varying  the  parliamentary  routine  by  serving  as  a 
Cabinet  Minister  in  various  posts,  as  president  of  the  Execu- 
tive Council  and  as  a  member  of  the  Legislative  Council.  His 
colleague,  James  Morris,  another  railroad  promoter  in  his 
own  interest,  was  likewise  a  seasoned  parliamentarian,  having 
gone  to  the  Upper  Canada  Assembly  in  1837,  thence  to  the 
Canadian  Parliament  in  1841.  From  1844  to  1858  Morris 
was  prominent  in  some  governmental  capacity  —  in  the  Legis- 
lative Council  (an  appointive  body  constituting  the  upper 
branch  of  Parliament),  as  Cabinet  Minister  in  the  Executive 
Council,  as  Speaker  of  the  Executive  Council,  and  as  Post- 
master General. 

There  was  John  Ross, —  member  of  the  Legislative  Council 
in  1848-1849,  Solicitor-General  of  Canada  in  1851,  then  At- 
torney-General, and  subsequently  Speaker  of  the  Legislative 
Council.  Sir  John  A.  Macdonald  was  among  the  list;  from 
1844  when  first  he  went  to  Parliament  he  stood  out  with  grow- 
ing conspicuousness,  becoming  a  Cabinet  Minister  in  1847, 
long  keeping  his  seat  in  Parliament. 

Grant  Each  Other  Charters 

More  in  evidence  among  the  charter  getters  was  George 
E.  Cartier,  of  Montreal;  he  entered  Parliament  in  1848,  and 
remained  for  decades,  meanwhile  having  his  season  of  com- 
manding authority  as  Cabinet  Minister  in  1856,  and  Premier 
in  1858.  Another  noted  promoter  was  John  Young;  he  was 
elected  to  Parliament  from  Montreal  in  1851  and  1854. 

Nor  should  we  omit  the  eminent  John  Sandfield  Macdonald, 
serving  in  Parliament  for  many  years  from  1841  onward,  and 
filling  various  high  government  offices  from  1851  to  1858, 
after  which  he  again  displayed  his  acumen  in  Parliament. 


INCEPTION   OF  THE   RAILROAD   POWER  157 

There,  too,  were  Francis  Hincks,  Hugh  Allan,  William  Ham- 
ilton Merritt,  J.  J.  C.  Abbott,  James  Ferrier,  William  Allan, 
Luther  H.  Holton,  and  many  other  notabilities;  and  last,  but 
by  no  means  least,  A.  T.  Gait  who  held  a  seat  in  Parliament 
for  many  years,  dating  from  his  first  election  in  1849. 

With  rapidity,  charters  of  every  description  were  forthcom- 
ing in  plethoric  succession.  Nearly  all  of  them  were  granted 
by  these  men  to  one  another,  and  to  strings  of  associates. 
These  were  the  men,  who,  aiming  at  creating  capitalists  or  be- 
coming capitalists  themselves  or  expanding  their  wealth,  in- 
vested themselves  and  associates  with  the  proprietary  posses- 
sion of  charters  for  railroad,  insurance,  canal,  banking,  gas 
and  water  and  other  companies,  all  of  which  charters  con- 
tained valuable  privileges  and  immunities  and  exclusive  rights. 

For  purposes  of  elucidation  we  shall  catalogue  a  number 
of  these  charters. 


They  Give  Themselves  Charters 

Among  the  incorporators  of  the  St.  Lawrence  and  Atlantic 
Railroad  Company,  chartered  March  17,  1845,  were  A.  T. 
Gait  and  Peter  McGill,— the  latter  long  President  of  the 
Bank  of  Montreal  and  a  member  of  the  Legislative  Council 
of  Canada.6 

The  list  of  incorporators  of  the  Canada,  New  Brunswick 
and  Nova  Scotia  Railway,  chartered  in  1847,  w^h  a  capital 
of  $2,000,000,  reads  as  though  it  were  largely  a  roster  of  Par- 
liament itself.  Heading  the  procession  of  incorporators  was 
ISir  Allan  N.  MacNab ;  there  were  five  members  of  the  Legis- 
lative Council,  including  the  active  John  Ross;  a  long  roll  of 
members  of  the  Provincial  Parliament;  the  Mayors  of  Mon- 
treal, Toronto  and  Kingston,  and  other  office  holders.  Asso- 
ciated with  them  were  a  number  of  trading  and  sundry  other 

6  Statutes  of  Canada,  1845,  p.  146. 


158  INCEPTION    OF   THE   RAILROAD   POWER 

men  of  capital  —  Sir  George  Simpson,  Governor  of  the  Hud- 
son's Bay  Company  and  Paul  Fraser  of  the  same  Company; 
several  bank  cashiers;  some  seigneurs  and  various  other  in- 
dividuals of  note  either  in  politics  or  trade.  The  law- 
yers for  the  Company  were  either  then  conspicuous  in  poli- 
tics or  became  more  so  later  —  attorneys  such  as  Henry 
Sherwood  of  Toronto  and  John  Rose  of  Montreal.7 

In  the  list  of  incorporators  of  the  Western  Telegraph  Com- 
pany, chartered  March  23,  1848,  were  Francis  Hincks  and 
Malcolm  Cameron,8  both  variously  members  of  Parliament 
and  of  the  Canadian  Government.  It  was  in  this  year  that 
the  Woodstock  and  Lake  Erie  Railway  Company  —  later  de- 
veloping into  the  Great  Southern  Railway  Company  —  was 
chartered ;  of  the  malodorous  operations  and  bribery  commit- 
ted by  the  promoters  of  this  railway,  some  instructive  details 
are  related  in  the  next  chapter. 

Sir  Allan  N.  MacNab,-  Malcolm  Cameron,  John  Young 
and  other  notables  prominent  in  Parliament  or  trade  or  in 
both,  were  the  incorporators  of  the  Canada  Life  Assurance 
Company  chartered  April  25,  1849.°  Five  days  later,  an- 
other charter  was  passed  by  the  Canadian  Parliament, 
naming  MacNab,  Young  and  others  as  proprietary  incor- 
porators of  the  Ontario  Marine  Fire  Insurance  Company,10 
On  the  same  day,  May  30,  1849,  the  Quebec  Warehousing 
Company  was  chartered,  with  Young  as  one  of  its  chief  pro- 
moters and  incorporated  beneficiaries.11 

It  was  during  this  brisk  session  that  the  Parliament  of  the 
Province  of  Canada  passed  an  Act  with  a  preamble  asserting 
the  principle  that  in  a  new  and  thinly-settled  country,  where 

7  The  full  list  of  incorporators  is  given  in  Imperial  Blue  Books  on 
Affairs  Relating  to  Canada,  Vol.  27,  "  Railways,"  pp.  7-8,  and  18-19  of 
Enclosure  "  Correspondence,"  etc. 

8  Statutes  of  Canada,  1848-1849,  p.  9, 

9  Ibid.,  1849,  p.  916. 
1QIbid.,  p.  899. 

11  Ibid.,  p.  1079. 


INCEPTION   OF   THE   RAILROAD   POWER  159 

capital  was  scarce,  the  assistance  of  Government  could  safely 
be  afforded  to  railway  lines,  "  and  that  such  assistance  is  best 
given  by  extending  to  Companies  constructing  railways  under 
charter  the  benefit  of  the  guarantee  of  the  Government  for 
loans."  12 

One  delectable  point  was  omitted  in  this  preamble,  namely, 
that  the  members  of  the  very  Parliament  that  enacted  this  law 
were  largely  themselves  railroad  promoters,  or  planning  to 
become  so. 

A  Long  Succession  of  Charters 

From  now  on  charter  after  charter  was  rolled  out  in  fin- 
ished form.  Hon.  Robert  Jones,  John  Young  and  associates 
were  vested  with  a  charter,  May  30,  1849,  for  the  Montreal 
and  Vermont  Junction  Railway  Company,13  and  on  the  same 
day,  a  charter  was  presented  to  Young,  Luther  H.  Holton 
and  partners,  empowering  them  to  construct  a  ship  canal  f  rom 
Lake  Champlain  to  the  River  St.  Lawrence.14 

Louis  Massue,  Louis  Methot,  James  Bell  Forsyth,  F.  R. 
Angers  and  other  personages,  some  of  whom  ranked  as 
honorables,  were  incorporated  August  JO,  1850,  as  the  pro- 
prietors of  the  Quebec  and  Richmond  Railway  Company.15 
Forsyth  and  others  obtained  a  charter  for  the  Quebec  and  St. 
Andrews  Railroad  Company.16  John  A.  Macdonald  and  John 
Hamilton  were  among  the  incorporators  of  the  Kingston  Fire 
and  Marine  Insurance  Company,  chartered  August  10,  1850." 

Equally  active  and  powerful  politicians  were  the  incor- 
porators of  the  Montreal  and  Kingston  Railway,  chartered  in 
1851.  This  group  of  promoters  was  small,  but  then  or  later 

^Statutes  of  Canada,  1848-1849,  p.  214. 

^Ibid.,  1849,  p.  124. 

™Ibid.,  ,p.  981. 

15 /&*(/.,  1849-1850,  p.  1576. 

wlbid.,  p.  1596. 

VI bid.,  p.  1701. 


160  INCEPTION   OF   THE   RAILROAD   POWER 

of  great  parliamentary  power :  John  Young,  George  Moffatt, 
A.  N.  Morin,  L.  H.  Holton,  A.  T.  Gait,  George  E.  Cartier,  and 
Ira  Gould.  The  charter  of  this  railway,  it  seems,  was  re- 
pealed at  the  instance  of  Sir  Francis  Hincks,  but  a  railroad 
of  much  the  same  name,  the  Kingston  and  Montreal,  came 
into  being  with  a  capital  of  £600,000  currency  in  shares,  of 
which  Gait,  Holton  and  D.  L.  Macpherson  gathered  into  their 
ownership  almost  the  whole.18  This  railway,  it  may  be  here 
remarked,  later  became  part  of  the  Grand  Trunk  Railway  of 
Canada,  controlled  by  much  the  same  coterie  of  legislators 
owning  the  Kingston  and  Montreal  Railway.  Often  these 
legislative  and  other  capitalists  sold  or  leased  charters  to  them- 
selves as  heads  of  other  railways,  profiting  exceedingly  thereby. 

Grand  Trunk  R.  R.  Incorporators 

The  charter  of  the  Grand  Trunk  Railway  of  Canada,  in  fact, 
was  regarded  as  one  of  the  richest  prizes.  This  was  secured, 
November  10,  1852,  by  A.  T.  Gait,  Peter  McGill,  George  Pem- 
berton,  George  E.  Cartier,  Luther  H.  Holton  and  other  Par- 
liamentary incorporators,  with  powers  to  build  a  railway  from 
Toronto  to  Kingston  and  thence  to  Montreal.19 

John  Sandfield  Macdonald  and  William  Merritt  headed  the 
group  of  incorporators  of  the  Dalhousie  and  Thorold  Railway 
Company,  chartered  May  23,  i853.20. 

John  Young  and  Sir  Allan  MacNab  were  prominent  in  the 
list  of  incorporators  of  the  London  and  Port  Sarnia  Railway 
Company,  chartered  in  the  same  year,21  and  MacNab  was 
also  among  the  incorporated  shareholders  of  the  Hamilton 

18  Trout's  Railways  of  Canada,  1870,  p.  146. 
18  Statutes  of  Canada,   1852,  pp.   103-104. 

20  Ibid.,  1853,  pp.  522-523. 

21  Ibid.,  p.  362.     Almost  immediately  after  this  charter  was  granted, 
the  London  and  Port  Sarnia  Railway  was  leased  to  the  Great  Western 
Railway  of  which  MacNab  was  the  head. 


INCEPTION   OF  THE  RAILROAD   POWER  l6l 

and  Port  Dover  Railway  chartered  at  the  same  time.22  P.  J. 
O.  Chauveau  (a  prominent  member  of  the  Canadian  Parlia- 
ment since  1844,  a  Cabinet  Minister  several  times,  and  later 
the  first  Premier  of  Quebec  after  Confederation),  headed  the 
promoters  and  incorporators  of  the  Quebec  and  Saguenay 
Railway  Company,  which  corporation  was  duly  chartered  in 
the  next  year.23 

The  directory  of  the  Niagara  District  Bank,  chartered  May 
J9»  X855,  comprised  James  Morris,  John  Ross,  John  Sandfield 
Macdonald,  William  Hamilton  Merritt  and  others  of  note,24 
and  among  the  incorporators  of  the  Zimmerman  Bank,  char- 
tered on  the  same  day,  were  Luther  H.  Holton  and  other  pub- 
lic men.25 

Get  Bank  Charters,  Also 

A  prominent  array  of  men  in  office  headed  the  list  of  pro- 
prietary incorporators  of  Molson's  Bank,  chartered  May  19, 
1855, —  an  institution  which  has  since  become  one  of  the  rich- 
est in  Canada :  there  were  William  Molson,  John  Molson,  Sr., 
George  Moffatt,  Samuel  Gerrard,  James  Ferrier  and  other 
Montreal  notables.26  Here  it  may  be  remarked  that  the  poli- 
ticians in  the  United  States  have  long  since  so  well  appraised 
the  value  of  bank  charters,  that  as  early  as  the  years  1799, 
1805,  1811  and  1824  bribery  had  been  used  to  wrest  from  the 
legislators  charters  for  the  Manhattan,  Mercantile,  Merchants' 
and  other  New  York  City  banks.27  But  in  Canada,  with  many 

**Ibid.,  p.  368. 
™Ibid.,  1854,  p.  118. 
1855,  p.  851. 
p.  836. 
p.  821. 

27  See  Journals  of  the  (New  York)  Senate  and  Assembly,  1805,  pp. 
351  and  399,  and  Ibid.,  1812,  p.  134.  See  also  History  of  the  Supreme 
Court  of  the  United  States,  pp.  215-216.  The  chartering  of  the 
Chemical  Bank  in  1824,  was  accomplished  by  a  considerable  sum  in 
bribe  money  and  $50,000  in  stock  as  bribes. —  See,  Journals  of  the 
(N.  F.)  Senate,  1824,  pp.  1317-1350. 


l62  INCEPTION   OF  THE  RAILROAD   POWER 

of  the  bank  incorporators  themselves  leaders  in  legislative 
councils,28  bribery  was,  in  general,  superfluous. 

More  railway  and  other  charters  were  consecutively  enacted. 
John  Young,  Sir  Allan  N.  MacNab  and  associates  obtained 
a  charter  for  the  Hamilton  and  South  Western  Railway  Com- 
pany, on  May  30,  i855.29  Four  members  of  the  Canadian 
Parliament  were  the  chiefs  among  the  incorporators  of  the 
Amherstburg  and  St.  Thomas  Railway  Company,  chartered 
in  the  same  year.30  J.  J.  C.  Abbott,  George  Moffatt,  Hugh 
Allan  and  other  political  luminaries  secured  a  charter,  July  i, 
1856,  for  the  Canadian  Marine  Insurance  Company.31  Wil- 
liam Cayley,  J.  H.  Cameron,  John  Beverly  Robinson  and  two 
other  members  of  the  Canadian  Parliament  were  among  the 
incorporators  of  the  Canada  Western  Railway  Company,  char- 
tered May  16,  i8s6.32 

The  list  of  incorporators  of  the  Strathroy  and  Port  Frank 
Railway  Company,  chartered  June  10,  1857,  was  headed  by 
Malcolm  Cameron.33  A  number  of  members  of  the  Canadian 
Parliament  were  among  the  promoters  and  incorporators  of 
the  Eastwood  and  Berlin  Railway  Company,  and  of  the  Brant- 
ford  and  Southwestern  Railway  Company,  both  chartered  in 
1857;  and  there  were  five  members  of  the  Canadian  Parlia- 
ment among  the  chartered  incorporators  of  the  Toronto  and 
Owen  Sound  Railway  Company,  chartered  in  the  same  year.34 

As  for  the  Bank  of  Canada,  chartered  in  1858,  its  incorpo- 
rated shareholders  were  headed  by  William  Cayley,  John  Ross 
and  other  Parliamentary  notabilities.35 

28  See  many  other  instances  in  Statutes  of  Canada. 

29  Statutes  of  Canada,  1855,  p.  761. 

30  Ibid.,  p.  713.    For  details  as  to  the  particular  history  of  this  rail- 
way see  next  chapter. 

**Ibid.,  1856,  p.  512. 
82/fcirf.,  p.  69. 
33  Ibid.,  1857,  p.  622. 
**Ibid.,  p.  638. 
**Ibid.,  1858,  p.  690. 


INCEPTION   OF  THE   RAILROAD   POWER  163 


More  Railroad  Charters 

Of  the  North  Shore  Railway  (which  later  became  the  Que- 
bec, Montreal,  Ottawa  and  Occidental  Railway,  some  90  miles 
long),  Sir  George  Simpson  of  the  Hudson's  Bay  Company 
was  an  early  president,  and  a  number  of  members  of  the  Par- 
liament of  Canada  were  directors.38  This  railroad  eventually 
received  2,700,000  acres  of  land  as  a  gift  from  the  Quebec 
Legislature,  and  $752,000  in  cash  bonuses  and  $1,948,600  in 
loans  from  the  Provincial  governments  and  from  various  mu- 
nicipalities. The  chief  pusher  of  this  railway  was  J.  Cauchon, 
a  prominent  Quebec  politician  who  was  Crown  Commissioner 
of  Lands  and  a  member  of  the  Canadian  Government  Min- 
istry in  1857;  in  that  capacity  he  assiduously  promoted  the 
North  Shore  Railway  Company's  demand  for  a  large  land 
grant,  and  he  later  became  the  Company's  president. 

A  notable  assemblage  of  legislators  comprised  the  list  of  in- 
corporators  of  the  European  and  North  American  Railway. 
Although  by  the  Act  of  Incorporation,  only  two  of  the  nine 
directors  were  to  be  elected  by  the  Legislature  to  represent 
the  Province  of  New  Brunswick,  almost  the  whole  personnel 
;  of  the  government  of  the  Province  of  New  Brunswick  were 
among  the  incorporators  —  the  Speaker  of  the  House  of  As- 
sembly, the  Provincial  Secretary,  the  Attorney-General,  and 
other  officials,  not  omitting  23  members  of  the  New  Bruns- 
wick Legislature.  Three  presidents  of  large  New  Brunswick 
banks  were  also  on  the  list.37  Certain  Maine  capitalists  were 
acting  in  unison.  The  European  and  North  American  Rail- 
way Company,  by  the  N.  B.  Act  of  March  15,  1851,  was  al- 
lowed a  capital  of  $1,500,000,  and  miscellaneous  privileges 

3°  Canada  Directory,  1857-1858,  p.  628. 

37  The  complete  list  of  incorporators  appears  in  Imperial  Blue  Books 
on  Affairs  Relating  to  Canada,  Vol.  27,  "Railways,"  etc.,  p.  12,  of 
Enclosure,  "Further  Correspondence  Relative  to,"  etc. 


164  INCEPTION   OF   THE   RAILROAD   POWER 

such  as  exemption  of  its  lands,  stock,  personal  property,  etc., 
from  taxation.38  A  month  and  a  half  later,  the  promoters 
gave  themselves,  by  special  law,  a  land  grant  to  the  extent  of 
five  miles  on  each  side  of  the  railway  along  the  entire  route 39 
—  a  modest  performance,  indeed,  seeing  that  they  could  as 
easily  have  made  it  ten  miles.40  However,  over  in  Maine  they 
obtained  another  land  grant  of  700,000  acres.41 

Charters  to  Obstruct  Development 

The  contractors  for  that  part  of  this  railroad  running  from 
St.  John,  N.  Bv  to  Point  du  Chene,  were  the  firm  of  Peto, 
Brassey,  Betts  and  Jackson.  They  were  obliged  (for  reasons 
hereafter  explained)  to  suspend  operations  in  1854,  because 
of  bankruptcy;  and  in  1856  the  Government  of  New  Bruns- 
wick bought  the  road  from  them  for  the  sum  of  $438,000,  and 
completed  its  construction.  That  portion  of  the  European  and 
North  American  Railway  is  now  part  of  the  Government- 
owned  Intercolonial  Railway.  Other  parts  of  the  European 
and  North  American  Railway  were  later  merged  —  in  1872- 
into  the  St.  John  and  Maine  Railway  which  received  from 
the  government  and  certain  municipalities  of  New  Brunswick 
$1,240,000  cash  subsidies  —  which  was  nearly  one-half  of  the 
entire  cost  of  the  road,  namely  $2,698,589. 

ss  Ibid.,  p.  17. 

89/Wrf.,  p.  27. 

*°In  the  case  of  another  railway  company,  the  St.  Andrews  and 
Quebec  (later  called  the  New  Brunswick  and  Canada  Railway,  127 
miles  in  length)  the  directors  at  first  claimed  ten  miles  of  land  on 
each  side  of  the  .line,  but  later,  in  1852,  amiably  consented  to  take 
the  five-mile  land  grant  on  each  side  voted  by  the  Assembly  instead 
of  the  ten  miles  as  proposed  by  the  board  of  directors.  Imperial  Blue 
Books,  etc.,  Vol.  27,  "  Railways,"  pp.  90-93  of  "  Further  Cor- 
respondence Relative  to  the  Projected  Railway  from  Halifax  to 
Quebec."  This  railway  received  subsidies  of  $575,000  from  the  gov- 
ernment, and  $47,500  from  the  municipalities,  of  New  Brunswick. 

41  See  Seventh  Report  of  the  Forest  Commissioner  of  Maine,  1908, 
p.  90. 


INCEPTION   OF   THE   RAILROAD   POWER  165 

These  are  but  a  few  examples  of  members  of  Parliament  vot- 
ing charters  largely  to  themselves;  we  shall  be  under  the  un- 
avoidable necessity  later  of  specifying  many  other  instances. 
Some  of  these  charters  were  obtained  without  the  slightest  idea 
of  constructing  railroads ;  it  was  the  general  recognized  custom 
to  get  charters  for  the  purpose  of  preventing  other  railroads 
from  entering  particular  regions  and  towns,  and  of  compelling 
such  railroad  companies  as  wanted  to  build  there  to  buy  out  the 
charters  at  exorbitant  prices. 

[  In  the  case  of  such  railroads  as  were  constructed,  the  pro- 
moters frequently  formed  construction  companies,  and  thus 
made  large  profits  from  railroads  the  charters  and  subsidies 
for  which  they,  themselves,  as  members  of  Parliament  had 
voted. 

Scramble  for  Charters 

There  was  thus  hardly  a  member  of  the  Parliament  of  the 

Province  of  Canada  or  of  the  other  legislative  or  the  executive 

bodies  who  was  not  in  some  way  zealously  pushing  railway 

or  other  projects  in  which  he  or  his  associates  were  personally 

;  interested. 

The  absence  of  indirection  and  the  open-handed  and  de- 
liberate fashion  marked  by  not  the  slightest  circumlocution 
were  the  most  remarkable  features  of  this  general  scramble 
to  vest  perpetual  rights  in  themselves  by  their  own  votes.     At 
a  later  period,  parliamentary  members  often  concealed  their 
identity  by  substituting  the  names  of  relatives,  friends  or  mere 
go-betweens,  but  at  this  particular  period  this  more  refined 
subterfuge  was  not  thought  of.     Quite  the  contrary.     High 
,  government  officials   and  members  of  parliaments   not  only 
!  openly  voted  charters  to  themselves  and  associates,  but  in  pros- 
\  pectuses,  often  issued  for  stock  jobbing  purposes,  advertised 
their  connection  as  a  guarantee  of  the  prominence  and  stabil- 
ity of  these  enterprises,  and  as  the  best  assurance  that  could 


l66  INCEPTION    OF   THE   RAILROAD   POWER 

be  given  that  the  whole  power  of  the  state  could  be  infallibly 
depended  upon  to  pass  whatever  additional  laws  were 
necessary,  and  to  give  gratuities  in  loans,  bonuses  and  land 
grants. 

The  Church  Subscribes  for  Stock 

Charters  were,  therefore,  easily  rolled  through  the  legisla- 
tive grind,  but  to  get  the  funds  for  construction  from  private 
sources  was  often  a  very  different  and  an  arduous  task. 

The  charter  of  the  St.  Lawrence  and  Atlantic  Railroad  Com- 
pany, incorporated  March  17,  1845,  gave  specific  power  to  the 
ecclesiastics  of  the  Seminary  of  St.  Sulpice  of  Montreal,  or 
any  other  civil  or  ecclesiastical  body,  to  lend  money  to  the 
Company  or  subscribe  for  its  stock ;  this  was  the  first  instance 
of  authority  of  this  kind  given  in  Canada. 

Timmins,  secretary  of  the  provisional  committee  of  the  Can- 
ada, New  Brunswick  and  Nova  Scotia  Railway  Company, 
wrote  from  Fredericton,  N.  B.,  January  7,  1850,  to  Earl  Grey, 
at  London,  that  he  had  been  canvassing  the  parishes  contig- 
uous to  the  line  of  railway  for  the  purpose  of  enrolling  stock- 
holders. 

"  The  venerable  Archbishop  Signy,"  he  wrote  further, 
"  having  supplied  me  with  letters  to  the  Catholic  clergy,  his 
name  has  been  like  a  tower  of  strength  among  them.  .  .  . 
In  proof  of  the  zeal  shown  by  the  clergy  in  Lower  Canada, 
I  have  the  pleasure  to  tell  .you  that  the  name  of  every  rector, 
vicar  and  cure  for  the  whole  distance  is  entered  in  the  Book 
of  Enrollment  [of  stockholders]  and  the  proposed  applica- 
tions for  shares,  and  the  enregistered  amount  in  Canada  and 
this  province  to  the  present  time,  including  the  £35,000  offered 
from  the  Hotel  Dieu  Nunnery  and  Seminary  of  Montreal,  and 
for  which  the  Bishop,  Monseigneur  Bourget,  has  entered  his 
name,  is  £223,500,  and  the  corporations  of  Quebec  have 
granted  £100,000,  also,  in  debentures,  to  carry  on  the  branch 


INCEPTION    OF   THE   RAILROAD   POWER  167 

to  Melbourne,  making  £335,000,  which,  considering  the  state 
the  Country  is  in,  is  gratifying.  .  .  /' 42 

It  was  not  from  private  sources,  however,  that  the  railroads 
secured  much  of  their  capital,  but  from  the  Government  of 
Canada  and  the  Provinces  and  the  municipalities.  Control- 
ling, as  they  did,  the  legislative  and  executive  bodies  and  mu- 
nicipal bodies  it  was  a  remarkably  easy  process,  they  soon  dis- 
covered, to  have  laws  enacted  indirectly  allowing  them  to  tax 
the  whole  body  of  the  people.  These  contributions  came  in 
the  form  of  forced  loans,  and  gifts  of  money,  land  and  other 
modes  of  bonusing,  pouring  constant  supplies  of  cash  and 
donations  into  the  hands  of  the  railway  promoters. 

42  Imperial  Blue  Books  on  Affairs  Relating  to  Canada,  Vol.  27, 
"  Railways "  Enclosure,  p.  17.  Timmins  was  accused  of  having  no 
authority  to  act  for  the  Company,  and  Earl  Grey  refused  to  communi- 
cate with  him  until  this  assurance  was  given. 


CHAPTER  XI 
FIRST  PERIOD  OF  RAILWAY  PROMOTERS 

Within  a  few  years  after  the  chartering  of  some  of  these 
initial  railway  projects,  their  promoters  had  transferred  to 
themselves  from  the  treasury  of  the  Government  of  the  Prov- 
ince of  Canada,  then  composed  of  Ontario  and  Quebec,  the 
aggregate  of  nearly  $22,000,000. 

Appropriated  first  in  the  form  of  loans,  almost  the  whole  of 
this  sum  was  either  soon  or  gradually  converted  into  the  equiv- 
alent of  a  gift.  Nor,  judging  by  current  standards,  was  it  a 
modest  gift.  Compared  to  the  extremely  slim  population  of 
those  parts  of  Canada  at  the  time,  and  the  great  purchasing 
power  of  given  amounts  as  contrasted  with  the  far  lower 
power  of  today,  that  $22,000,000  represented  a  sum  perhaps 
equal  to  ten  times  that  amount  in  these  more  enhanced  years. 
But,  as  we  shall  see,  this  was  by  no  means  the  only  cash 
bounty.  Subsidies  totalling  nearly  $10,000,000  more  were,  in 
that  infant  age  of  the  railways,  obtained  from  counties  and 
municipalities  in  what  are  now  the  Provinces  of  Ontario  and 
Quebec. 

The  prodigality  of  these  money  advances  can  be  somewhat 
adequately  estimated  when  the  scanty  population  and  the 
paucity  of  developed  resources  of  the  Canada  of  that  time  are 
recalled.  These  subsidies,  moreover,  were  merely  the  cash 
largess.  Many  of  the  railway  charters  specifically  allowed 
the  free  appropriation  of  timber,  stone  and  other  necessary 
construction  material  from  the  public  domain.  Besides  the 
cash  subsidies,  the  railway  promoters  contrived  to  get  from 

168 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  169 

municipalities  extensive  gifts  of  city  land  for  approaches, 
terminals  and  stations,  all  of  which  land  became  of  ultimate 
enormous  value. 

In  every  direction,  by  force  of  law  and  often  out  of  law, 
many  of  the  politicians  and  their  allies  and  associates  were 
grasping  economic  power,  which  is  to  say,  means  for  accumu- 
lating wealth. 

Railroads  Were  His  Politics 

Such  contests,  frequently  carried  on  by  competing  individ- 
uals or  groups,  engendered  bargaining  or  bitter  animosities  and 
enmities  which  were  transferred  to  the  open  political  arena, 
often  operating  as  the  secret  or  open  cause  in  the  overthrow 
of  this  or  that  Ministry  and  other  such  political  changes. 
Occasionally,  some  politician  more  candid  than  his  colleagues, 
divulged  the  secret  as,  for  instance,  Sir  Allan  N.  MacNab  did 
when  he  made  the  blunt  declaration,  famous  in  the  politics  of 
the  period,  that  railroads  were  his  politics. 

Admixed  with  economic  aims  was  the  discussion  of  certain 
issues  affecting  religious,  racial  and  other  controversies,  but 
these,  too,  had  their  underlying  strata  of  definite  economic 
aspects. 

To  invest  the  past  with  the  color  of  legitimacy  is  a  marked 
characteristic  of  conventional  history.  Here,  say  the  apolo- 
gists, was  a  vast  country,  the  resources  of  which  had  to  be 
developed.  The  public  collectively  were  not  ready  to  under- 
take the  construction  of  great  railway  systems,  and  therefore 
private  capitalist  enterprise  had  to  step  forward  and  consum- 
mate this  indispensable  work.  Responding  to  this  legitimate 
enterprise,  the  successive  Canadian  governments  as  legiti- 
mately presented  companies  of  capitalists  with  the  necessary 
laws  and  means. 

This  sounds  plausible,  but  unfortunately  the  facts  at  no 
stage  coincide. 


I7O  FIRST   PERIOD  OF   RAILWAY  PROMOTERS 

Sir  Francis  Hincks'  Mission 

To  begin  with,  there  is  the  fact  that  among  the  chief  bene- 
ficiaries of  the  charters  and  subsidies  were  members  of  Parlia- 
ment or  of  the  Government.  Then  presently  came  a  notable 
Grand  Trunk  Railway  incident  involving  Sir  Francis  Hincks. 

An  Act  passed  in  1850  contained  a  conditional  provision 
that  the  Grand  Trunk  Railway  could  be  constructed  as  a  pub- 
lic work  by  the  Canadian  Government  joining  with  the  munici- 
palities. This  law  was,  in  itself,  a  clear  recognition  that  pri- 
vate capitalist  enterprise  was  not  necessary.  Why  were  the 
provisions  never  carried  out?  Why  did  Sir  Francis  Hincks, 
who,  in  his  capacity  of  Inspector-General  or  Finance 
Minister,  was  sent  as  Canadian  envoy  to  England  to  con- 
tinue negotiations  with  the  British  Government,  not  insist  upon 
the  execution  of  this  particular  clause?  Why  was  it  that  the 
contract  for  building  the  Grand  Trunk  was  turned  over  to  the 
English  contracting  firm  of  Peto,  Brassey,  Betts  and  Jackson  ? 

Hincks'  change  of  front  was,  wrote  Thomas  C.  Keefer,  per- 
haps the  most  eminent  Canadian  civil  engineer  of  his  time,  "  in 
consequence  of  propositions  made  to  him  in  England  by  Eng- 
lish contractors  of  great  wealth  and  influence.  ...  It  was 
also  believed  that  a  powerful  though  indirect  influence  wielded 
by  those  contractors,  materially  contributed  to  the  adverse  po- 
sition assumed  by  the  new  Colonial  Minister  on  a  question  to 
which  the  Imperial  Government  had,  by  his  predecessor,  been 
so  far  committed.  The  course  of  the  Canadian  envoy  can  only 
be  defended  on  the  assumption  that  a  refusal  was  inevitable, 
and  that  a  proper  appreciation  led  him  to  appreciate  it. 

Contractors  Set  Aside  $250,000  of  Stock  for  Hincks 

"  No  more  unfavorable  impression  would  probably  have  re- 
mained had  not  his  name  subsequently  appeared  as  the  pro- 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  17! 

posed  recipient  of  a  douceur  [a  present  or  an  intended  bribe] 
from  the  contractors  in  the  shape  of  £50,000  [$250,000]  of 
paid  up  stock  in  the  capital  stock  of  the  Company  which,  how- 
ever, he  repudiated  when  it  was  announced."  * 

But  this  abbreviated  account  is  an  incomplete  and  meager 
description  of  the  full  charges  against  Hincks.  It  omits  a 
number  of  important  particulars,  and  does  not  clarify  the 
question  of  precisely  why  it  was  that  those  English  contrac- 
tors, the  most  thrifty  and  methodical  of  men  in  business  mat- 
ters, should  have  been  so  uncommonly  generous  in  thus  set- 
ting aside  $250,000  of  Grand  Trunk  stock  in  Hincks'  name. 

That  this  amount,  or  to  be  exact,  £50,400  sterling  in  shares, 
was  credited  to  Hincks,  is  an  incontestable  fact;  and  it  was 
this  very  fact,  leaking  out  in  1854,  that  caused  considerable 
discussion.  It  pressed  seriously  for  explanation  and  investi- 
gation, more  especially  as  there  were  eight  other  specific 
charges  that  in  various  ways  Hincks,  and,  in  some  cases,  cer- 
tain of  his  colleagues,  had  taken  advantage  of  their  high  po- 
sitions to  speculate  in  land,  the  price  of  which  was  increased 
by  canal  or  railway  projects  and  legislation,  or  to  speculate 
in  railway  stocks  or  municipal  railway  bonds. 

To  attempt  to  suppress  these  charges  by  a  mere  denial,  or 
by  ignoring  them,  was  an  impossibility ;  they  were  too  grave, 
and  the  popular  and  the  political  talk  was  too  great.  There- 
fore the  course  of  an  investigating  committee  was  decided 
upon.  This  committee  was  chosen  by  the  Legislative  Coun- 
cil or  upper  House,  nearly  all,  if  not  all,  of  the  members  of 
which  had  themselves  benefited  by  similar  speculations  or  had 
similar  connections  and  interests.  The  Speaker  of  that  body 
was  John  Ross,  the  head  of  the  Grand  Trunk  Railway  of 
Canada.  These  facts  were  not  favorably  commented  upon. 

The  fact  was  proved  by  the  evidence  produced  before  this 

1  Eighty  Years'  Progress  of  British  North  America,  1781  to  1861, 
pp.  199-200. 


172  FIRST    PERIOD    OF   RAILWAY    PROMOTERS 

committee  that  1,008  shares  of  Grand  Trunk  stock,  valued  at 
£50,400  sterling,  had,  on  April  25,  1853,  been  allotted  to 
Hincks,  and  that  a  few  days  later,  on  May  3,  1853,  the  sum 
of  £10,080  was  paid  in  cash  as  part  payment  on  that  stock,  and 
a  receipt  was  made  out  in  Hincks'  name  and  in  his  favor. 
There  was  also  another  £50,400  worth  of  Grand  Trunk  shares 
credited  similarly  to  Alexander  Mackenzie  Ross.  But  what 
anonymous  benefactor  was  it  that  paid  the  cash,  amounting 
to  one-twentieth  of  the  price  of  the  stock,  for  Hincks'  pre- 
sumable benefit? 

Sources  of  the  Allotted  Stock 

That  was  a  delicate  and  difficult  point  to  determine,  and  it 
was  some  time  before  it  was  fully  solved.  John  Ross  testified 
that  he  didn't  know  who  paid  the  cash;  it  was  popularly  re- 
marked that  as  the  head  of  the  Grand  Trunk  Railway,  Ross' 
innocence  of  knowledge  of  certain  facts  was,  indeed,  extraor- 
dinary, doubly  so  considering  that  Ross,  in  1852,  had,  as  pres- 
ident of  that  railway,  been  sent  to  England  to  superintend  the 
completion  of  the  contract  for  the  construction  of  the  Grand 
Trunk.  A.  T.  Gait,  Grand  Trunk  promoter,  also  professed 
the  densest  ignorance  as  to  this  particular  transaction ;  he  tes- 
tified that  he  knew  nothing  of  who  made  the  original  allot- 
ment of  stock. 

Light,  however,  was  obtained  from  George  Carr  Glyn  and 
Thomas  Baring,  English  bankers  and  Grand  Trunk  directors 
in  London. 

In  response  to  written  questions,  Glyn  wrote  to  the  Legisla- 
tive Council  Committee  that  the  allotment  of  stock  to  Hincks 
and  to  Ross  was  made  by  the  Grand  Trunk  directors  upon  the 
representations  of  Sir  S.  M.  Peto,  of  the  contracting  firm  of 
Peto,  Brassey,  Betts  and  Jackson.  Baring's  written  replies  to 
the  committee's  queries  corroborated  this.  It  was  Peto, 


FIRST   PERIOD  OF   RAILWAY   PROMOTERS  173 

Baring  informed  the  Committee,  who  had  paid  the  first  deposit 
on  the  shares,  and  it  was  likewise  Peto  who  had  caused  the 
receipts  to  be  made  out  in  the  names  of  Hincks  and  of  Ross.2 
According  to  Baring's  view,  Hincks  and  Ross  had  no  personal 
interest. 

Hincks  Accused  of  Bargaining 

Called  as  a  principal  witness,  George  Brown,  a  member  of 
Parliament,  put  his  answers  in  the  form  of  a  definite  charge 
that  Hincks  had  made  a  bargain  with  the  English  contractors. 
By  this  bargain,  Brown  alleged,  the  contractors  were  to  get 
the  bulk  of  the  Grand  Trunk  stock  and  bonds,  and  exorbitant 
stated  sums  for  the  construction  of  the  railway.  Brown  fur- 
ther charged  that  by  reason  of  Hincks'  influence,  the  contract- 
ors obtained  a  charter  for  constructing  the  Quebec  and  Trois 
Pistoles  Railway  —  a  Grand  Trunk  branch  line;  that  Hincks 
was  also  of  service  to  those  contractors  in  the  Quebec  and 
Richmond  Railway  contract,  and  that  Hincks  had  given  them 
his  great  influence  in  promoting  through  Parliament  a  Bill  for 
the  amalgamation  of  these  and  other  railways. 

Furthermore,  Brown  charged  that  in  return  for  that  £50,400 
of  Grand  Trunk  stock,  Hincks  had  used  his  official  influence 
to  get  the  Grand  Trunk  contract  for  the  firm  of  Peto,  Brassey, 
Betts  and  Jackson.  It  was  believed,  Brown  charged,  that  in 
return  they  had  placed  the  £50,400  sterling  of  stock  in  his 
name,  and  had  paid  £10,080  sterling  on  account  to  Hincks' 
credit,  and  that  before  further  installments  became  payable, 
the  fact  of  Hincks'  owning  so  large  an  amount  of  stock  in- 
opportunely became  public,  and  caused  the  sudden  abandon- 
ment of  the  plan. 

The  genera^   belief  was,  Brown  stated,  that  Hincks  must 

2  Legislative  Council  Sessional  Papers,  Vol.  13,  First  Sess.,  Fifth 
Parl.,  1854-1855,  Appendix  A.  A.  A.  A.,  pp.  25-26.  (Although  this 
document  is  indexed,  the  pages  are  not  numbered.) 


174  FIRST    PERIOD   OF   RAILWAY   PROMOTERS 

have  known  of  the  transaction;  that  as  chief  promoter  and  a 
director  of  the  Grand  Trunk  he  must  have  consulted  the  al- 
lotment list,  and  could  not  have  been  ignorant  of  the  holdings 
of  stock  credited  to  him.  There  was  a  belief  in  other  quar- 
ters, Brown  averred,  that  the  stock  was  assigned  to  Hincks 
and  the  deposit  paid  for  him  so  as  to  enable  him  to  sell  it  to 
others,  and  thus  pocket  the  premium  or  profit  expected  from 
the  sale  of  his  shares. 

Committee  Exonerates  Hincks 

Despite  the  plea  that  it  was  the  practice  to  admit  such  tes- 
timony as  circumstantial  and  relevant,  the  majority  of  the 
committee  by  vote  would,  not  accept  Brown's  evidence.  Their 
refusal  was  based  upon  the  ground  that  only  matters  within 
his  personal  knowledge  would  be  accepted.  They,  however, 
allowed  his  testimony  to  be  published. 

Hincks'  own  explanation  was  that  the  Grand  Trunk  shares 
credited  to  Ross  and  himself  were  merely  "held  in  trust  for 
allotment  in  Canada  to  parties  who  might  be  desirous  to  take 
an  interest  in  the  Company."  If  this  were  so,  it  presented  the 
sight  of  a  Prime  Minister  acting  as  an  intermediary  for  the 
disposition  of  stock  the  market  price  of  which  depended  much 
upon  legislation  that  he  himself  caused  to  be  enacted. 

It  was  obviously  an  incongruous  explanation,  but  it  was 
adopted  by  the  Legislative  Council  Committee,  which  went 
even  further  and  reported  that  the  stock  had  been  put  in 
Hincks'  name  "  without  his  knowledge,"  and  that  he  had  no 
personal  interest  in  it.  That  the  report  of  this  considerate 
committee  was  of  a  "  whitewashing "  character  was  freely 
charged;  certainly  its  extenuating  treatment  of  the  other 
charges  brought  against  Hincks  seemed  to  impart  much  sub- 
stance to  this  widely-expressed  view.  Frankly  cynical  that 
report  was,  too,  excusing  speculations  by  Ministers  with  the 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  175 

off-hand  remark  that  everyone  else  who  could  do  so  was  doing 
likewise.  No  evidence  of  corruption  could  be  found  —  so  this 
committee  reported.3 

Hincks'  Friends  Get  Contract 

So  the  English  contracting  firm  of  Peto,  Brassey,  Betts  and 
Jackson  got  the  contract.  Already  its  members  were  enriched 
by  their  operations  in  the  construction  of  many  railroads  in 
England  and  elsewhere  in  Europe.  If  any  curious  investi- 
gator seeks  to  know  the  methods  by  which  the  railroads  in 
England  were  built,  he  has  only  to  consult  the  graphic  account 
that  Smiles  gives  in  his  "  Life  of  George  Stevenson."  There 
the  informative  details  will  be  found  of  how  these  lines  were 
"  scamped  "  by  improper  ballasting  and  other  methods  of  in- 
efficient construction  by  which  contractors  reaped  the  largest 
possible  profit  for  the  cheapest,  hastiest  and  poorest  kind  of 
work.  These  methods  were  transferred  to  Canada. 

For  their  work  of  construction  the  English  Grand  Trunk 
contractors  agreed  to  take  two-thirds  of  their  pay  in  stocks 
and  bonds  —  a  fact  which  subsequently  led  to  the  ruin  of  all 
of  them  except  Brassey,  who  shrewdly  edged  out  of  the  mess 
in  time. 

The  all-potent  banking  house  of  Rothschilds,  in  reality, 
however,  owned  an  eighth  interest  in  the  capital  of  the  Grand 
Trunk.  The  Canadian  Government's  financial  agents  of  the 
Grand  Trunk  in  England  were  the  big  banking  houses  of 
Baring  Brothers  and  Company,  and  Glyn,  Mills  and  Company. 

3  See  Legislative  Council  Sessional  Papers,  Vol.  13,  First  Sess., 
Fifth  Par!.,  1854-1855,  Appendix  A.  A.  A.  A.,  giving  the  report  and 
incorporating  the  testimony.  So  useful  a  document  was  this  report, 
it  may  be  parenthetically  explained,  that  Sir  Francis  Hincks,  in  his 
Reminiscences,  published  thirty  years  later,  fell  back  upon  it  as  his 
vindication  notwithstanding  the  fact  that  certain  other  transactions 
(which  are  described  in  this  chapter),  were  admitted  both  by  the 
committee  and  by  Hincks  himself. 


176  FIRST   PERIOD  OF   RAILWAY   PROMOTERS 

Less  than  six  men  or  concerns  in  England  held  most  of  the 
Grand  Trunk's  stock. 


The  Grand  Trunk's  Exalted  Directors 

Of  the  nineteen  Grand  Trunk  directors,  nine  were  nomi- 
nated by  the  Canadian  Government  for  the  purpose  of 
safeguarding  the  public  interest.  Of  these  nine,  four  were 
Cabinet  Ministers,  and  eight  of  the  nine  were  really  nominees 
of  the  English  contractors.  A  number  of  the  government 
directors  were  stockholders  in  this  project  or  other  projects 
at  the  same  time.  Whether  they  were  able  to  reconcile  these 
conflicting  interests,  and  to  what  extent  and  in  just  what  man- 
ner they  responded  to  the  purposes  of  their  appointment,  will 
be  seen  later  in  this  chapter. 

Very  impressive,  therefore,  was  the  directorate  of  the  Grand 
Trunk  Railway  Company.  The  list  comprised  not  a  few  of 
the  most  powerful  and  what  were  considered  the  most  illus- 
trious Canadian  public  men. 

There  was  John  Ross,  Member  and  Speaker  of  the  Legis- 
lative Council,  Solicitor-General  of  Upper  Canada,  and 
stockholder  in  the  Grand  Trunk  Railway  of  Canada;  he  was 
appointed  president  of  the  Grand  Trunk  through  the  all- 
powerful  influence  of  the  English  contractors  controlling  the 
stock,  and  he  remained  president  until  1862.  There  was  Fran- 
cis Hincks,  promoter  and  incorporator,  as  we  have  seen,  of 
several  railroads,  and  a  stockholder  in  the  Grand  Trunk.  A 
merchant  and  bank  manager  in  early  life,  Hincks  went  to  Par- 
liament, pushed  the  Great  Western,  the  Grand  Trunk  and 
other  railway  projects  and  subsidies,  became  Inspector-Gen- 
eral (a  position  analagous  to  Finance  Minister),  and  then 
became  Prime  Minister  of  Canada,  and  was  knighted. 

Another  of  the  Grand  Trunk  directors  was  E.  P.  Tache; 
he  had  been  Cabinet  Minister  in  1848,  and  thereafter  was 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  177 

Receiver-General,    Speaker  of  the   Legislative   Council,   and 
then  head  of  the  Government;  a  Sir,  he  too,  became,  in  1858. 


A  Roll  of  Honor 

In  addition,  there  was  James  Morris,  Member  of  the  Legis- 
lative Council  and  Postmaster-General;  Malcolm  Cameron, 
President  of  the  Executive  Council;  R.  E.  Caron,  Speaker 
of  the  Legislative  Council;  Peter  McGill,  Member  of  the 
Legislative  Council,  the  Executive  Council,  and  for  decades 
President  of  the  Bank  of  Montreal;  he,  too,  was  a  Grand 
Trunk  stockholder.  Among  other  notabilities  was  George 
E.  Cartier,  Member  of  Parliament  for  Montreal,  and  later 
Premier  of  Canada,  the  Grand  Trunk's  chief  lawyer.  Such 
were  some  of  the  Grand  Trunk's  directors  as  listed  by  the 
Company's  prospectus. 

All,  or  nearly  all  of  these  men,  as  we  have  previously  noted, 
were  among  the  incorporated  proprietaries  of  various  differ- 
ent or  interconnected  railway  or  other  private  companies.  For 
instance,  Hincks,  Morris  and  other  Government  members 
were,  as  an  investigation  in  1855  showed,  partners  in  a  syndi- 
cate organized  to  buy  from  the  Government  the  Domain  Farm 
on  the  Seignory  of  Lauzon.  They  calculated  that  the  comple- 
tion of  the  Grand  Trunk  Railway  would  increase  the  prop- 
erty's value.  The  transaction  was  duly  consummated. 
Hincks  admitted  the  syndicate's  operations,  but  justified  them 
on  the  ground  that  he  had  not  used  his  official  position  un- 
duly and  had  not  benefited  financially.  The  same  disclosures 
showed  that  Malcolm  Cameron  speculated  in  Grand  Trunk 
stock.4 

4  See  Legislative  Council  Sessional  Papers,  etc.,  1854-1855,  Vol.  13, 
Appendix  A.  A.  A.  A.  One  of  the  first  witnesses  called,  Moses  H. 
Purley,  agent  for  Crown  Lands  in  New  Brunswick,  testified  (in  re- 
plying to  a  leading  question),  that  he  had  known  a  member  of  the 
Executive  Council  to  buy  at  special  sales  property  which  that  very 


178  FIRST   PERIOD  OF  RAILWAY  PROMOTERS 

Get  $i5,557»5oo  of  Public  Cash 

The  Grand  Trunk  Railway  came  into  existence  with  the 
impressive  capital  of  £9,500,000,  increased  a  little  later  to 
£12,900,000  sterling.  The  Canadian  Parliament  was  ex- 
tremely generous.  Of  this  amount  it  guaranteed  £3,111,500 
sterling,  the  several  sums  of  which  were  granted  on  different 
occasions. 

When,  in  1855,  one  of  these  sums  of  £500,000  sterling  aid 
to  the  Grand  Trunk  Railway  was  being  voted  through  the 
Legislative  Assembly  of  the  Province  of  Canada,  protests 
were  made  in  that  body  against  votes  being  cast  by  Gait  and 
Holton  on  the  ground  that  they  were  extensive  contractors 
of  the  Grand  Trunk  or  its  amalgamated  lines,  and  a  similar 
protest  was  made  against  the  vote  of  Angus  Morrison  on  the 
ground  of  his  being  a  stockholder.  Morrison  admitted  that 
he  had  held  stock,  but  denied  any  present  pecuniary  interest. 
Motions  to  disqualify  Gait,  Holton  and  Morrison  from  voting 
were  defeated.5  Hincks,  Ross,  MacNab,  Cayley,  Cartier  and 
other  railroad  promoters  all  joined  in  voting  down  the  mo- 
tion.' 

In  consideration  of  getting  the  contract  on  their  own  terms, 
the  contracting  concern  of  Peto,  Brassey,  Betts  and  Jackson 
had  assumed  the  risk  of  disposing  of  the  stock  and  bonds. 
The  prospectus  issued  by  the  Company  and  framed  by  Hincks, 
Ross  and  Gait,  was  a  glowing  production.  To  investors  it 
held  out  the  certainty  of  dividends  of  lij^  per  cent.  But  how 


member   in  his  capacity  of   Cabinet   Minister  had   expressly   ordered 
to  be  sold  at  a  special  price. 

5  Journal  of  the  Legislative  Assembly,  Prov.  of  Canada,  1855.  Vol. 
XIII,  Part  II,  pp.   1030-1031. 

6  Ibid.    The   returns  to   Parliament  in   that  very  year   showed  that 
Hincks,    McGill,    William   Allan,   John    Ross   and    other   members   of 
Parliament   or    Government   were    stockholders   in   either   the   Grand 
Trunk  or  in  railways  amalgamated  with  it.  —  See  Journals  of  the  Legis- 
lative Assembly,  1854-1855,  Appendix  F.  F.,  Vol.  XIII. 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  179 

such  profits  could  be  extracted  from  a  thinly-populated  coun- 
try, with  small  developed  resources,  and  especially  from  a 
country  traversed  by  numerous  competitive  waterways  and 
canals,  was  hard  to  see.  Even  the  English  contractors,  it 
was  said,  were  misled  by  this  roseate  prospectus. 

Manipulating  Grand  Trunk  Stock 

After  having  been  manipulated  upward,  the  market  price 
of  Grand  Trunk  stocks  and  bonds  began  to  decline  and  con- 
tinued so.  It  was  freely  asserted  that  this  came  about  largely 
because  of  the  extravagance,  blundering  and  inefficiency  that 
at  every  step  marked  the  construction  of  the  Grand  Trunk 
railway. 

The  staff  of  officials  sent  over  from  England  were  paid 
"  princely  salaries  " ;  the  chief  of  these  received  an  annual 
salary  of  $25,000,  which,  together  with  his  "  expenses," 
brought  the  whole  paid  to  this  official  up  to  $43,000  a  year  - 
considered  a  colossal  sum  at  that  period.  Other  official  sal- 
aries ranged  in  lavish  proportion. 

The  St.  Lawrence  and  Atlantic  Railway,  controlled  by  Sir 
A.  T.  Gait  and  others,  was  "  unloaded  "  upon  the  Grand  Trunk 
Railway  Company  at  cost,  notwithstanding  the  known  fact 
that  its  stock  had  been  sold  at  50  per  cent,  discount.  After 
getting  it  at  this  extortionate  price,  which  had  been  paid  upon 
the  representation  that  it  was  complete,  the  Grand  Trunk  Rail- 
way Company  had  to  spend  another  $1,000,000  to  put  that 
line  in  some  fair  degree  of  shape  between  Montreal  and  Port- 
land.7 

One  of  the  charges  of  corruption  brought  against  Sir 
Francis  Hincks  was  that  as  Cabinet  Minister  he  had  obtained 
secret  advance  information  of  this  amalgamation,  and  had 

7  Keefer,  Eighty  Years'  Progress  of  British  North  America,  1781  to 
1861,  p.  208. 


l8o  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

speculated  in  the  stock.  That  he  did  get  a  telegram  from  A. 
T.  Gait  and  did  buy  stock  was  admitted,  as  likewise  the  fact 
that  the  market  value  of  the  stock  went  up. after  the  amalga- 
mation. But  the  generous  Legislative  Council  Committee  re- 
porting on  this  and  other  charges,  smoothed  over  the  trans- 
action on  the  ground  that  Hincks  did  not  buy  the  stock  until 
several  weeks  after  the  amalgamation.8 

"  Scamping  "  the  Construction  Work 

When  it  became  evident  that  Grand  Trunk  stocks  and  bonds 
were  depreciating,  the  agents  and  sub-contractors  of  Peto, 
Brassey,  Betts  and  Jackson  "  scamped "  construction  work 
whenever  they  could ;  most  railroad  construction  was  paid  for 
not  by  the  work  but  by  the  mile.  It  was  Brassey,  it  may  here 
be  remarked,  who  introduced  the  subcontracting  system  in 
Canada.  Provisions  of  the  contracts  were  either  not  enforced 
or  were  but  meagerly  complied  with.  East  of  Toronto  — 
the  section  of  the  work  carried  on  by  the  English  contractors 
—  the  rails  were  of  poor  quality,  and  the  ballasting  and  the 
placing  of  sleepers  were  so  flimsily,  badly  done  as  to  lead  later 
"  to  a  destruction  of  rolling  stock  and  property  .  .  .  which  is 
unprecedented  in  the  history  of  railways."  9  The  entire  scheme 
of  construction  was  grossly  and  manifestly  inefficient.  In  level 
country  the  railroad  was  not  raised  so  as  to  keep  out  snow 
and  water.  The  gradients  in  hilly  regions  were  badly  ar- 
ranged and  flagrantly  defective.  Everywhere  "  the  contract- 

s  See  Legislative  Council  Sess.  Papers,  etc.,  Vol.  13,  1854-1855, 
Appendix  A.  A.  A.  A.  See  also,  Hincks'  Reminiscences,  p.  347. 

9  Keefer,  p.  209.  "  At  this  identical  time,"  says  Keefer,  "  the  con- 
tractors wielding  a  gigantic  scheme  which  traversed  every  county  in 
the  Province,  virtually  controlled  the  government  and  the  legislature 
while  the  expenditure  continued."  Keefer  might  have  added,  with 
equal  accuracy,  that  they  controlled  certain  influential  newspapers, 
also,  and  through  them  a  certain  part  of  what  was  called  public 
opinion. 


FIRST   PERIOD  OF   RAILWAY   PROMOTERS  l8l 

ors  kept  the  road  as  near  the  surface  as  the  contract  permitted, 
no  matter  how  much  it  might  be  smothered  in  winter  and 
flooded  in  spring,  or  how  frequent  and  severe  the  gradients 
became."  Irrespective  of  railroad  considerations,  stations 
were  placed  where  land  was  cheapest ;  this  was  done  to  obtain 
political  support,  or  benefit  from  a  speculation  in  building 
lots.10 


Brassey  Holds  on  to  His  Fortune 

The  firm  of  Peto,  Brassey,  Betts  and  Jackson  later  went 
bankrupt,  but,  doubtless  foreseeing  how  affairs  were  going, 
Brassey  had  discreetly  withdrawn.  He  left  an  enormous  for- 
tune said  to  have  been  £7,000,000  or  nearly  $35,000,000,  which 
his  eldest  son,  Lord  Brassey,  later  Governor  of  Victoria,  Aus- 
tralia, largely  inherited.  Most  of  this  wealth  came  from  the 
profits  of  railway  construction  work;  for  it  was  Brassey,  as 
we  have  said,  who  developed  that  vicious  system  of  sub- 
contracting which  introduced  the  sweatshop  evils,  so  to  speak, 
on  construction  work.  Strikes  were  numerous.  The  con- 
struction camps  were  in  such  a  condition  that  cholera  found 
its  easy  prey  among  the  laborers ;  in  one  case  in  particular,  60 
in  a  gang  of  200  men  were  down  with  cholera  at  the  same 
time;  it  is  needless  to  say  that  many  died.11 

As  for  the  construction  of  the  western  part  of  the  Grand 
Trunk  from  Toronto  to  Sarnia,  the  contractors  were  mainly 
such  Parliament  members  as  A.  T.  Gait,  L.  H.  Holton,  D.  L. 
Macpherson  leagued  with  Casimir  Gzowski  (later  a  Sir)  in 
the  firm  of  Gzowski  and  Company.12  The  list  of  stockholders 

10  Ibid.,  p.  210.    Keefer  estimated  in   1861  that  in   addition  to  the 
$1,000,000  expended  to  put  the  St.  Lawrence  and  Atlantic  Railway  in 
shape,  the  Grand  Trunk  had  to  spend  $6,000,000  on  its  main  line  to 
make  up  deficiencies  in  the  carrying  out  of  the  contract. 

11  A  True  Captain  of  Industry,  Article  on  Brassey  in  the  Canadian 
Monthly  and  National  Review,  issue  of  October,  1872,  p.  317. 

12  High  members  of  the  Government  saw  no  impropriety  in  making 


l82  FIRST    PERIOD   OF   RAILWAY   PROMOTERS 

of  the  Toronto  and  Guelph  Railway  Company,  controlled  by 
the  Grand  Trunk  Railway  Company,  showed  that  Gzowski 
and  Company  were  the  largest  private  stockholders,  owning 
10,398  shares.13 

Samuel  Thompson,  one  of  Toronto's  prominent  publishers 
and  municipal  officials  at  the  time,  and  secretary  of  the  To- 
ronto and  Guelph  Railway  Company,  refers  in  his  Reminis- 
cences to  a  certain  contract  for  laying  out  the  Esplanade  for 
the  Toronto  terminus  of  the  Grand  Trunk.  Gzowski  and 
Company  succeeded  in  prevailing  upon  the  officials  to  super- 
sede the  first  contract  that  they  had  by  a  second.  By  this 
second  contract,  Thompson  relates,  the  city  lost  about  $50,000, 
and  Gzowski  and  Company  benefited  in  one  item  alone  to  the 
extent  of  at  least  $16,000,  that  sum  representing  the  differ- 
ence between  the  rates  of  wages  in  1853  and  1855  —  pre- 
sumably by  the  contractors  retaining  the  old  scale  of  wages.14 
But  such  profits  were  nothing  compared  to  the  immense  po- 
tential value  of  the  Esplanade  property  turned  over  by  the 
city  of  Toronto  to  the  Grand  Trunk  and  the  Northern  Rail- 
way. 

It  was  at  this  identical  period  that,  as  we  shall  see,  Mayor 
John  G.  Bowes  of  Toronto  was  a  partner  with  Hincks,  the 
Prime  Minister  of  Canada,  in  a  corrupt  bargain  in  the  private 
purchase  and  sale  of  Toronto  City  bonds  issued  as  aid  to  the 
Northern  Railway  Company. 

As  to  the  circumstances  of  this  particular  transaction  full 
details  are  set  forth  later  in  this  chapter. 

fortunes  out  of  construction  of  railroads.  The  Hon.  L.  H.  Holton, 
connected  with  the  firm  of  Gzowski  and  Co.,  which  built  the  western 
part  of  the  Grand  Trunk,  was  at  the  same  time  a  member  of  Parlia- 
ment, and  a  director  of  the  Grand  Trunk,  as  also  a  bank  president  and 
director.  He  later  was  a  Cabinet  Minister  in  various  Administrations, 
and  twice  Minister  of  Finance.  He  remained  in  Parliament  until 
his  death  in  1880. 

13  Appendix  F.  F.,  Appendix  No.  9,  Vol.  XIII,  Appendices  to  Jour- 
nals of  the  Legislative  Assembly,  etc.,  1854-1855. 

14  Reminiscences  of  a  Canadian  Pioneer,  p.  281. 


FIRST    PERIOD   OF    RAILWAY    PROMOTERS  183 


Did  Governor-General  Elgin  Take  Away  £80,000? 

Writing  cursorily  and  with  a  scantiness  of  detail  as  to  con- 
ditions in  1853,  Thompson,  in  his  volume,  has  a  curious  pas- 
sage to  this  effect :  "  The  Ministry  then  in  power  was  known 
as  the  Hincks-Tache  Government.  .  .  .  People  remembered 
William  Lyon  Mackenzie's  prophecy  who  said  that  he  feared 
that  Francis  Hincks  could  not  be  trusted  to  resist  temptation. 
fWhen  Lord  Elgin  [Governor-General  of  Canada]  went  to 
England,  it  was  whispered  that  his  lordship  had  paid  off  £80,- 
ooo  of  mortgages  on  his  Scottish  estates,  out  of  the  proceeds 
of  speculations  which  he  had  shared  with  his  clever  minister. 
The  St.  Lawrence  and  Atlantic  transaction,  the  £50,000  Grand 
Trunk  stock  placed  in  his  [Hincks']  credit  —  as  he  asserted, 
without  his  consent, —  and  the  Bowes  transaction,  gave  color 
to  many  stories  circulated  to  his  [Hincks']  prejudice.  And 
when  he  [Hincks]  went  to  England,  and  received  the  govern- 
orship of  Barbadoes,  many  people  believed  it  was  the  price 
of  his  private  service  to  the  Earl  of  Elgin."  15 

If  there  was  any  substance  in  these  charges,  the  available 
official  documents  do  not  contain  any  support  of  them,  al- 
though much  went  on  that  never  was  disclosed  in  official 
reports.  Hincks  made  a  general  denial. 


Members  of  Parliament  "Entertained" 

At  the  same  time,  railway  contractors,  "  practical  men " 
versed  in  all  of  the  arts  of  shoddy  construction  and  bribery, 
came  over  from  the  United  States  to  seize  their  share  of  the 
harvest. 

"  One  bold  operator,"  Keef er  wrote,  "  organized  a  system 
which  virtually  made  him  ruler  of  the  province  [of  Canada] 
for  several  years.  In  person  or  by  agents  he  kept '  open  house,' 

15  Ibid.,  p.  290. 


184  FIRST    PERIOD   OF   RAILWAY   PROMOTERS 

where  the  choicest  brands  of  champagne  and  cigars  were  free 
to  all  the  people's  representatives,  from  the  town  councillor 
to  the  cabinet  minister;  and  it  was  the  boast  of  one  of  these 
agents  that  when  the  speaker's  bell  rang  for  a  division  more 
members  of  Parliament  were  to  be  found  in  his  apartments 
than  in  the  library  or  any  other  single  resort.  By  extensive 
operations  he  held  the  prosperity  of  so  many  places,  as  well 
as  the  success  of  so  many  schemes  and  individuals,  in  his 
grasp,  that  he  exercised  a  quasi-legitimate  influence  over  many 
who  could  not  be  directly  seduced.  Companies  about  to  build 
a  railway  or  get  a  municipal  loan  or  other  grants  were  led 
to  believe  that  if  he  were  the  contractor,  he  could  get  the 
sanction  of  the  government  to  any  extent.'* 

Blackmailing  Operations 

Keefer  further  wrote  that  before  the  English  contractors 
for  the  Grand  Trunk  Railway  could  proceed  with  their  schemes 
in  the  Canadian  Parliament  they  were  compelled  to  give  this 
lobbyist-contractor  a  one-third  interest  in  their  contract.  He, 
too,  foreseeing  Grand  Trunk  troubles,  compromised  by  ex- 
changing his  one- third  interest  for  £12,000  sterling. 

When  an  English  contractor  was  confidently  about  to  swoop 
upon  the  contract  for  the  Toronto  and  Hamilton  Railway,  up 
turned  this  same  irrepressible  individual ;  he  had  to  be  bought 
off  with  £10,000  sterling.  "But,"  Keefer  narrates,  "he  had 
to  disgorge  later  when  seeking  the  cooperation  of  this  same 
English  contractor  for  the  celebrated  but  abortive  Southern 
Railway  scheme."  ie 

The  Toronto  Northern  Railway  contract  had  been  turned 
over  to  a  band  of  American  contractors.  As  payment  they 
were  to  receive  the  Company's  bonds  and  stocks  and  govern- 
ment guarantee  debentures.  But  before  they  could  get  any 

16  Eighty  Years'  Progress  of  British  North  America,  etc.,  pp.  222-223. 


FIRST    PERIOD   OF    RAILWAY    PROMOTERS  185 

part  of  the  government  debentures,  the  contractors  were  re- 
quired, by  the  terms  of  the  grant,  to  complete  one-half  of  the 
first  75  miles.  When  their  cash  was  exhausted,  they  asked 
the  Government  for  an  advance  of  money,  despite  their  not 
having  completed  the  necessary  work. 

"Fixing"  Government  Officials 

"  But,"  so  Keefer  describes  the  incident.  "  the  Government 
found  the  road  so  '  scamped '  under  the  American  engineer 
(who  subsequently  openly  became  a  partner  with  the  con- 
tractors), that  the  Commissioner  of  Public  Works  refused  to 
recommend  the  issue  of  provincial  bonds. 

"  Here  was  a  fix !  But  the  contractors  sent  for  their  Amer- 
ican '  brother '  who,  for  a  brokerage  of  $100,000  of  the  first 
mortgage  bonds  of  the  Company,  undertook  to  obtain  the 
guarantee.  He  went  to  his  colleague  in  the  government;  the 
Commissioner  of  Public  Works  was  shunted  out  of  office  on 
a  suddenly-raised  issue  (which  was  immediately  thereafter 
dropped),  and  just  one  week  afterward,  the  guarantee  bonds 
were  forthcoming. 

"  In  connection  with  this  incident  it  is  worthy  of  remark, 
that  a  member  of  the  Government  shortly  afterward  paid  away 
nearly  £10,000  of  the  first  mortgage  bonds  of  the  same  com- 
pany in  the  purchase  of  real  estate."  1T 

The  Great  Western  Railway  sought  legislation  to  lay  a 
double  track  from  Hamilton  to  London.  Keefer  says  that  the 
Company  was  gravely  assured  that  the  Government  was  power- 
less to  give  the  Company  the  right;  the  American  contractor 
in  question,  the  Company  was  told,  had  too  much  influence  in 
Parliament. 

The  contractor  was  accordingly  "  seen."  What  was  his 
price?  It  was  the  contract  for  the  double  tracking.  The 

17  Ibid.,  p.  224. 


1 86  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

double-track  scheme  was  later  dispensed  with  by  the  Company 
as  unnecessary,  but  other  privileges  were  sought  and  secured. 
"  Among  other  favors  obtained  by  the  legislation  thus  bartered 
for,  was  the  power  to  disregard  that  provision  of  the  railway 
Act  which  requires  trains  to  stop  before  crossing  the  bridge 
over  the  Desjardins  Canal  [near  Hamilton].  In  less  than  two 
years  thereafter,  a  train  which  did  not  stop  plunged  through 
this  very  bridge,  and  among  the  first  recovered  of  the  sixty 
victims  to  that  '  accident '  was  the  dead  body  of  the  great  con- 
tractor himself."  18 

The  particular  contractor  thus  referred  to  was  Samuel 
Zimmerman. 

It  is  in  such  authentic  accounts  that  we  get  real  glimpses 
of  some  of  the  methods  used  at  the  time ;  and,  as  we  shall  see, 
we  get  still  other  definitely  established  facts  of  other  methods 
used  by  railway  promoters. 

Rids  Itself  of  the  Government  Lien 

We  shall  now  revert  to  the  Grand  Trunk  Railway. 

Pleading  that  it  was  now  in  a  sadly  embarrassed  condition, 
the  directors  of  that  railway,  placing  themselves  in  the  legal 
position  of  paupers,  applied  to  the  Canadian  Parliament  for 
"  relief." 

It  promptly  came,  in  1857,  although  not  without  encounter- 
ing great  opposition  from  the  Great  Western  Railway  forces 
in  Parliament,  led  by  Sir  Allan  N.  MacNab  and  also  antago- 
nism from  other  railway  interests.  A  motion  for  an  inquiry 

18  Ibid.,  p.  224.  This  catastrophe  happened  on  March  12,  1857. 
Keefer  could  have  added  that  he  wrote  with  authority;  he  was,  in 
fact,  one  of  the  examining  civil  engineers  reporting  on  the  accident. 
Although  planned  originally  to  be  built  of  oak  timber,  the  bridge 
was  constructed  of  pine,  and  was  in  a  bad  condition.  After  one 
theory  following  another  put  out  'by  the  Company  to  explain  the 
cause  of  the  accident  had  been  discarded,  the  Great  Western  Railway 
Company  declared  that  Providence  was  responsible! 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  187 

into  Grand  Trunk  affairs  was  voted  down.  It  was  during  this 
debate  that  the  Hon.  J.  Cauchon,  Commissioner  of  the 
Crown  Lands  Office  and  Cabinet  Minister,  curtly  informed 
Premier  Tache  that  he  would  not  vote  for  the  Grand  Trunk 
Aid  Bill  unless  he  (Cauchon)  was  given  assurance  that  a 
grant  of  1,500,000  acres  would  be  made  to  the  North  Shore 
Railway  Company;  Cauchon  himself  read  his  letters  on  the 
subject  in  Parliament.  Although  Cauchon  did  not  then  suc- 
ceed in  obtaining  the  land  grant,  the  North  Shore  Railway 
Company  later  secured  an  even  larger  land  grant,  and  Cauchon 
(as  already  noted),  became  the  Company's  president. 

An  accommodating  law  was  passed  (20  Vic.  Cap.  XI.)  by 
which  the  Canadian  Parliament  declared  that  it  would  forego 
all  interest  in  its  claims  against  the  Grand  Trunk  until  the 
earnings  and  profits  of  the  Company,  comprising  those  of  the 
St.  Lawrence  and  Atlantic  Railway  Company,  should  be  suf- 
ficient to  pay  all  charges  including : 

1.  All  expenses  of  managing,  working  and  maintaining  the 
lines  of  the  Company. 

2.  The  rent  and  interest  of  the  St.  Lawrence  and  Atlantic 
Railway  (acquired  by  the  Grand  Trunk),  and  all  interest  on 
the  bonds  of  the  Company,  exclusive  of  those  held  by  the 
Province  of  Canada. 

3.  A  dividend  of  six  per  cent,  on  the  paid  up  share  capital 
of  the  Company,  in  each  year  in  which  the  surplus  earnings 
should  admit  of  same. 

At  the  same  time,  the  government  directors  of  the  Grand 
Trunk  were  dispensed  with. 

Parliament  "Too  Liberal*' 

Further  legislation  favorable  to  the  Grand  Trunk  Railway 
was  enacted  in  the  following  years.  On  June  9,  1862,  a  law 
was  passed  (25  Vic.  Cap.  50.)  the  purport  of  which  again 


l88  FIRST   PERIOD  OF   RAILWAY  PROMOTERS 

allowed  the  postponing  the  payment  of  the  Government  loans, 
and  authorized  the  Company  to  issue  £500,000  sterling  of  equip- 
ment bonds.  Five  years  later  another  law  was  enacted  au- 
thorizing the  Company  to  issue  another  £500,000  sterling  of 
equipment  bonds  to  take  priority  over  all  other  charges,  ex- 
cept the  bonds  allowed  in  1862.  With  all  the  outstanding  is- 
sues of  bonds  and  other  what-nots,  the  Government  now  stood 
a  slim  enough  chance  of  ever  recovering  its  loans,  and  much  of 
them  it  never  did  get  back.  In  properly  subdued  yet  indignant 
language,  Swinyard,  president  of  the  Great  Western  Railway, 
sourly  complained  of  the  too  "  liberal  spirit  "  which  Parliament 
had  shown  towards  the  Grand  Trunk  Railway.19 

In  that  era  the  most  bitter  competition  for  privileges,  pow- 
ers, subsidies  and  traffic  prevailed  between  various  of  the  rail- 
road companies.  Each  had  their  sturdy  representatives  in  Par- 
liament; and  in  the  course  of  this  warfare  each  sought  hard 
to  damage,  if  not  cripple  the  others.  If  one  company  was  un- 
duly favored  with  Government  grants,  loans  or  other  laws  or 
donations  more  than  the  others,  acid  resentment  resulted. 
The  same  was  true  with  regard  to  Provincial  legislation  and 
municipal  by-laws;  competing  companies  used  every  possible 
influence  to  prevent  one  another  from  securing  bonuses  or 
other  grants  of  public  aid. 

The  two  most  aggressive  foes  were  the  Great  Western  Rail- 
way Company  and  the  Grand  Trunk  Railway  Company  of  Can- 
ada—  the  one  with  a  line  with  branches  from  Suspension 
Bridge  to  Windsor,  and  the  road  of  the  other  running  from 
Quebec  and  Montreal  to  Toronto  and  other  places  and  with 
projected  lines  paralleling  certain  of  the  Great  Western's  ter- 
ritory in  Ontario.  This  sharp  competition,  it  may  be  said 
here,  continued  for  many  years  more  until  the  Grand  Trunk 
absorbed  the  Great  Western. 

19  See  Sessional  Paper  No.  61,  Sess.  Papers,  Vol.  I,  No.  9,  1867- 
1868,  p.  5. 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  189 


The  Great  Western's  Diversion  of  Funds 

From  November,  1852,  to  June,  1855,  the  Canadian  Govern- 
ment made  loans  totaling  £770,000  to  the  Great  Western  Rail- 
way Company.  "  The  Company,"  confidentially  wrote  Finance 
Minister  John  Rose  to  the  Governor-in-Council,  February  24, 
1868,  "was  represented  in  Parliament  by  the  late  Sir  Allan 
MacNab  for  many  years  its  President,  and  it  was  he  who,  in 
1852,  moved  the  Resolution  in  the  Railway  Committee  set  forth 
in  the  Company's  petition  " —  a  resolution  aiming  to  give  the 
Great  Western  a  monopoly  in  the  Ontario  Peninsula,  but  which 
bill  failed  to  pass,20  for  the  very  obvious  reason  that  at  that 
time  Grand  Trunk  influences  were  dominant. 

Finance  Minister  Rose  made  the  accusation  that  the  accounts 
of  the  Great  Western  Railway  showed  that  its  promoters 
appropriated  a  total  of  about  $1,225,000  of  the  funds  in  doing 
what  the  Company  was  never  chartered  to  do  and 
what  it  had  no  legal  right  to  do  —  in  constructing  a  railroad 
in  the  United  States  —  the  Detroit  and  Milwaukee  Railway. 
Rose  further  asserted  that  fully  $4,000,000  of  its  capital  was 
used  thus,  and  also  absorbed  in  constructing  other  lines  and 
in  steamship  investments.21 

Here  the  fact  may  be  interjected  that  so  far  as  cash  went, 
the  Commercial  Bank  of  Canada  had  advanced  £250,000  to 
the  Detroit  and  Milwaukee  Railway  Company.  With  accu- 
mulated interest  this  claim  amounted  to  considerably  more  by 
1863.  The  bank,  however,  could  get  nothing,  inasmuch  as  the 
Great  Western  had  foreclosed  two  mortgages  in  1860  against 
the  Detroit  and  Milwaukee  Railway,  and  a  lawsuit  availed 

20  See  Sessional  Paper  No.  61,  Sessional  Papers,  Dom.  Parl.,  1867- 
1868,  Vol.  I,  No.  9,  p.  17. 

21  Sessional  Paper  No.  7,  Sess.  Papers,  Dom.  Parl,  1869,  Vol.  II,  No. 
3.    Rose's  communication,  June  9,   1868,  to  Thomas  Swinyard,  presi- 
dent of  the  Great  Western  Railway  Co.    Rose  was  a  member  of  a 
prominent  European  and  New  York  banking  firm. 


190  FIRST    PERIOD   OF   RAILWAY   PROMOTERS 

nothing.  C.  J.  Brydges  was  one  of  the  Canadian  directors  of 
the  Detroit  and  Milwaukee  line;  the  two  other  Canadian  di- 
rectors were  those  politicians  James  Ferrier  and  William  Mol- 
son.  Brydges  was  appointed  receiver,  and  the  road  was  sold 
in  1860  to  the  Great  Western  for  the  nominal  sum  of  $1,000,- 
ooo.  Down,  therefore,  went  the  Commercial  Bank  of  Canada 
in  resounding  ruin ;  it  was  one  of  the  largest  banks  in  Canada, 
and  its  collapse  made  a  great  sensation. 

A  Series  of  Tragic  Accidents 

Although  millions  of  dollars  were  thus  advanced  from  the 
public  treasury  to  the  Great  Western  Railway,  that  line  was 
so  inefficiently  constructed  that  disastrous  wrecks,  causing  con- 
siderable loss  of  life,  were  frequent. 

At  Lobo,  on  June  2,  1854,  six  passengers  were  killed,  and 
14  injured;  at  Thorold,  on  July  16,  1854,  seven  passengers 
were  killed  and  14  injured;  a  terrible  wreck  at  Baptiste  Creek, 
on  October  27,  1854,  caused  the  death  of  57  persons  and  the 
injury  or  mutilation  of  46.  These  are  a  few  of  the  many  ac- 
cidents in  that  single  year  of  1854,  calling  forth  the  appoint- 
ment of  an  investigating  Legislative  Commission. 

"  We  find,"  the  Commission  stated  in  part,  "  that  at  the 
opening  of  the  road,  the  embankments  and  cuttings  were  in  a 
dangerous  state ;  that  the  ties  or  sleepers  were  without  the  stay 
or  support  of  gravel  on  the  surface;  the  road  crossings  and 
cattle  grades  were  unfinished.  The  trestle  works  in  some  cases 
substituted  for  embankments  were  notoriously  insecure,  and 
in  fact  neither  grading  nor  superstructure  were  in  a  fit  state 
to  hazard  the  prosecution  of  traffic  in  the  face  of  the  con- 
tingencies of  the  coming  winter  and  spring  in  this  climate  and 
in  this  country."  22 

22  Report  of  Commissioners  Appointed  to  Inquire  into  a  Series  of 
Accidents  on  the  Great  Western  Railway,  etc.,  Leg.  Council  Sess. 


FIRST    PERIOD   OF    RAILWAY    PROMOTERS  IQI 

The  Commission  incorporated  evidence  proving  that  Man- 
aging-Director Brydges  of  the  Great  Western  Railway  had  re- 
ceived full  warning  from  a  noted  civil  engineer  that  the  road 
was  in  a  too  dangerous  state  to  open  it  for  traffic,  but  that  he 
disregarded  the  warning.  No  railway  official  was  punished 
for  this  continuous  loss  of  life,  and  indeed  it  was  only  three 
years  later  that  the  appalling  disaster  (which  we  have  already 
described),  happened  on  the  Great  Western's  system  at  Des- 
jardin's  Canal,  near  Hamilton. 

Extracting  Subsidies  from  the  Towns 

By  1858,  the  railway  contractors  had  completed,  or  pro- 
fessed to  have  completed,  1,483  miles  of  railway  in  Ontario 
and  Quebec.  Funds  poured  into  their  laps.  The  most  amaz- 
ing audacity  was  shown  in  securing  loans  from  municipali- 
ties. 

From  the  town  of  Port  Hope  with  about  only  3,000  popula- 
tion, a  loan  of  $740,000  was  squeezed.  The  town  of  Niagara 
with  but  2,500  population,  was  influenced  to  give  $280,000. 
Brockville,  with  a  bare  4,000  population,  yielded  $400,000,  and 
Cobourg,  with  the  same  number  of  inhabitants,  $500,000.  The 
City  of  Ottawa,  with  less  than  10,000  population,  presented 
$200,000,  and  the  City  of  London,  having  no  larger  population, 
$375,400.  Brantford,  of  not  more  than  6,000  population,  was 
persuaded  into  voting  a  $500,000  loan.23  These  are  but  a  few 
examples  of  the  manner  in  which  small  and  poor  municipali- 

Papers,  Vol.  13,  1854-1855,  Appendix  Y.  Y.  No  doubt  the  conditions 
as  reported  by  this  Commission  were  true  enough,  yet  it  should  be 
noted  that  the  Commission  was  regarded  as  subject  to  Grand  Trunk 
influences.  It  was  a  common  practice  for  legislative  committees,  one 
or  more  of  the  members  of  which  were  interested  in  a  particular  rail- 
way, to  disclose  the  truth  as  to  the  workings  of  a  competitive  railway, 
with  the  object  of  damaging  its  reputation  and  the  market  value  of  its 
stock. 

23  See  the  itemized  table  in  Eighty  Years  of  Progress  in  British 
North  America,  etc.,  pp.  216-217. 


192  FIRST   PERIOD   OF  RAILWAY   PROMOTERS 

ties  were  depleted  of  funds,  and  corrupted  or  compelled  to 
mortgage  future  generations  for  the  benefit  of  railway  con- 
tractors and  owners,  who  exacted  tribute  with  the  most  in- 
ordinate and  presumptuous  insistence.24  Keefer  tells  of  one 
village  allowed  by  the  Governor-in-Council  (the  permission 
of  which  body  was  required  under  the  Railway  Loan  Act), 
to  borrow  $300  per  head  of  the  population. 

Northern  Railway  Subsidy  Jobbery 

As  for  subsidies  procured  from  the  larger  municipalities, 
the  Northern  Railway  scandal,  revolving  around  the  issue  of 
Toronto  City  bonds  in  aid  of  that  project,  revealed  the  meth- 
ods often  used  to  get  municipal  subsidies. 

In  1850  the  City  of  Toronto,  or  rather  its  officials,  voted  a 
gift  of  £25,000,  a  valuable  site  for  a  station,  and  the  right  of 
way,  to  aid  this  enterprise.  The  next  year  the  City  of  Toronto 
was  prevailed  upon  to  loan  £35,000  more  to  the  Company,  under 
conditions  making  it  virtually  a  gift.  One  of  these  conditions 
was  that  certain  parts  of  the  road  had  to  be  completed  before 
these  sums  were  available.  Despite  the  fact  that  they  did  not 
comply  with  the  required  conditions,  the  contractors,  in  the 
very  act  of  "  scamping,"  had  the  assurance  to  ask  for  the  full 
subsidy.  Mayor  John  G.  Bowes  had  been  a  director  of  this 
same  railway  company. 

An  illegal  by-law  was  thereupon  passed  to  hand  over  £60,000 
to  the  Railway  Company.  Advised  by  "  eminent  counsel " 
that  this  by-law  was  in  fact  an  illegality,  the  contractors  and 
their  confederates  quickly  hit  upon  a  plan  of  circumventing  it. 
A  Bill  was  hurried  through  Parliament.  This  Bill  was  appar- 

24  Keefer  estimated  that  by  1861  the  municipal  railway  loans  in 
Ontario  amounted  to  $5,594,000  and  those  in  the  Province  of  Quebec 
to  $025,940.  There  was  also  about  $3,000,000  more  contributed  by 
municipalities  which  sum  was  not  entered  in  the  railway  fund. — Ibid., 
p.  215. 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  193 

ently  innocent  and  modest-looking;  its  sole  ostensible  object 
was  to  allow  Toronto  to  issue  a  loan  of  £100,000  of  bonds  for 
the  purpose  of  consolidating  the  City's  debt.  But  it  was  in 
the  fifth  clause  of  the  Bill  that  the  "little  joker"  cunningly 
lay.  Notwithstanding  the  fact  that  the  subsidy  railway  de- 
benture bonds  voted  by  the  City's  officials  did  not  mature  for 
twenty  years,  this  clause  compelled  Toronto  to  pay  at  once 
to  the  contractors  the  debenture  bonds  at  their  face  value. 
Prime  Minister  Hincks  rushed  this  Bill  in  all  of  its  stages 
through  Parliament  in  a  few  days,  and  it  became  law.  None 
or  few  of  the  legislators  knew  that  a  few  weeks  previously 
Hincks  and  Bowes  had  personally  bought  those  very  bonds  at 
four-fifths  their  face  value. 

Soon  revelations  were  forthcoming  that  Bowes  and  Hincks 
had  been  in  secret  partnership,  and  that  they  had  bought  from 
the  Northern  Railway  contractors,  at  a  large  discount,  a  batch 
of  the  identical  bonds  issued  by  Toronto  to  aid  that  Company. 
By  certain  bank  manipulations,  it  appeared,  they  did  this  with- 
out having  to  spend  a  cent  of  their  own  money. 

Hincks  and  Mayor  Bowes  Share  Profits 

In  the  Court  of  Chancery,  in  1854,  Bowes  admitted  the  trans- 
action, and  likewise  did  Hincks.  Each  of  them,  it  was  dis- 
closed, made  a  profit  of  £4,115. 

Even  the  Legislative  Council  Committee  which,  in  1855,  pre- 
sented Hincks  with  so  white  a  bill  of  moral  and  political  health, 
admitted  that  Hincks'  partnership  with  Bowes  was  fully 
proved,  but  asserted  that  Hincks  had  not  used  his  influence  as 
a  Cabinet  Minister  to  get  the  money  for  buying  the  bonds. 
The  Judicial  Committee  of  the  Privy  Council,  however,  de- 
nounced the  transaction  as  a  corrupt  bargain,  and  Bowes  was 
condemned  to  pay  a  judgment  of  nearly  £5,000.  Samuel 
Thompson,  who  was  then  chairman  of  the  finance  committee 


194  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

of  the  Toronto  Municipal  Council,  insisted  in  his  Reminis- 
cences, published  thirty  years  ago,  that  Hincks  had  used  his 
official  powers  for  his  private  profit,  and  that  deception  had 
been  practiced  on  Toronto's  Finance  Committee  and  Munici- 
pal Council.25 

No  doubt  it  was  to  this  incident  that  Keefer  referred  in  his 
account  (already  cited  in  this  chapter),  of  what  he  described 
as  the  Toronto  Northern  Railway  contract.  That,  writing  a 
few  years  after  the  transaction,  Keefer  should  have  made  cer- 
tain definite  charges,  at  a  time  when  most  of  the  people 
concerned  were  alive,  and  that  these  charges,  published  in 
book  form,  should  have  called  forth  neither  denial  nor  libel 
suit,  certainly  invests  them  with  weight,  corroborated  as  they 
were  by  sworn  admissions  as  to  other  bargaining. 

Keefer's  account  supplies  the  finishing  touches.  He  wrote, 
as  we  have  seen,  that  the  contractors  "  scamped  "  the  work ; 
that  the  Commissioner  of  Public  Works,  because  of  that  no- 
torious fact,  refused  to  sanction  giving  them  subsidy  bonds; 
that  the  contractors  offered  a  certain  contract-lobbyist  a  bribe 
of  $100,000  of  first-mortgage  Northern  Railway  bonds  if  he 
would  arrange  matters  with  the  Government  to  hand  over  the 
subsidy  bonds  to  them ;  that  the  lobbyist  immediately  got  busy 
and  in  contact  with  a  certain  high  Government  official;  that 
on  a  trumped-up  issue  or  pretext  the  Commissioner  of  Public 
Works  was  summarily  dislodged  from  office;  that  the  guar- 
antee subsidy  bonds  were  then  issued  in  a  rush ;  and  that  soon 

25  See  Legislative  Council  Sessional  Papers,  First  Session,  Fifth 
Parl,  1854-1855,  Vol.  XIII,  Appendix  A.  A.  A.  A.  The  full  transcript 
of  the  proceedings  in  the  Court  of  Chancery  is  embodied  in  this 
document.  See  also,  Thompson's  Reminiscences  of  a  Canadian  Pioneer, 
p.  283.  Thompson  was  Secretary  of  the  Toronto  and  Guelph  Rail- 
way Company  until  it  was  absorbed  by  the  Grand  Trunk  Railway  in 
1853.  Municipal  officials  of  the  various  other  cities  were  likewise 
stockholders  in  different  railway  companies.  That  after  the  ex- 
posure of  such  a  transaction  Bowes  should  have  been  elected  to 
Parliament  was  characteristic  of  the  elections  of  the  times.  The 
annals  are  full  of  election  scandals. 


I 
FIRST   PERIOD   OF  RAILWAY   PROMOTERS  195 

afterward  a  prominent  member  of  the  Government  bought 
real  estate  for  which  as  payment  he  gave  nearly  £10,000  of  the 
first  mortgage  bonds  of  the  Northern  Railway. 

Many  other  of  the  railways  were  so  badly  constructed  that 
after  the  contractors  had  turned  them  over  to  the  owning  com- 
panies, great  additional  expenditures  were  required  to  put 
them  even  in  the  most  passable  shape.  And  this  notwithstand- 
ing the  fact  that  public  subsidies  often  were  enough  to  pay  for 
one-half  or  more  of  the  entire  cost  of  construction. 

An  example  of  this  fact  was  the  case  of  the  Cobourg  and 
Peterboro  Railway,  the  contractor  for  which  was  the  ubiquitous 
Samuel  Zimmerman.  Although  this  road  was  only  30  miles 
long,  the  cost  amounted  to  nearly  $1,000,000,  of  which  sum 
municipalities  contributed  $500,000.  The  road-bed  was  badly 
deficient,  and  the  equipment  not  much  better.  With  a  celebra- 
tion the  road  was  finally  opened  for  traffic,  but  hardly  had  the 
winter  of  1853  set  in  when  the  railway's  bridge,  three  miles 
long  across  Rice  Lake,  was  crushed  in  and  splintered  by  the 
ice.  An  examination  revealed  that  the  work  had  been 
scamped ;  the  piles  had  not  been  sufficiently  driven  or  properly 
stayed.  Costly  repair  work  had  to  be  done  before  the  road 
was  tolerably  fit  for  travel.26 

Grafting  was  general ;  and  one  serious  scandal  after  another 
now  developing  revealed  that  the  railway  promoters  resorted 
to  any  means  to  secure  funds  from  the  public  treasury. 

The  Great  Southern  Railway  Corruption 

By  what  methods  railway  contracts,  municipal  loans  and  the 
control  of  railways  were  often  secured  was  evidenced  in  the 
disclosures,  in  1857,  concerning  the  Great  Southern  Railway. 

The  Great  Southern  Railway  project  was  a  scheme  to  form 

26  Trout's  The  Railways  of  Canada,  a  short  and  laudatory  work, 
published  in  1871,  pp.  117-118. 


IQ6  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

a  railway  running  from  the  Niagara  River  to  the  Detroit  and 
St.  Clair  rivers.  It  was  to  traverse  the  rich  agricultural  belt 
of  southern  Ontario.  This  railway,  as  planned,  was  to  be  an 
amalgamation  of  two  railroads,  one  chartered  to  run  in  the 
west  of  Ontario,  the  other  in  the  eastern  section. 

The  eastern  part  of  this  ambitious  project  was  the  Wood- 
stock and  Lake  Erie  Railway,  chartered  in  1848  to  be  com- 
pleted within  ten  years.  Originally  Hincks  was  one  of  its 
promoters,  but  he  later  withdrew.  So  notorious  was  the  gen- 
eral rascality  that  attended  this  railway's  progress,  or  rather 
lack  of  progress,  that  in  1857  a  Select  Committee  of  the  Leg- 
islative Assembly  was  appointed  to  investigate  the  whole  Great 
Southern  scheme. 

This  committee  reported,  on  May  20,  1857,  these  facts: 
That  in  1852,  Samuel  Zimmerman  made  a  bargain  with  the 
railway's  directors  to  supply  two-thirds  of  the  funds  with 
which  to  construct  and  operate  the  road.  In  exchange,  he  was 
to  get  one-third  in  bonds,  the  same  amount  in  stock  and  the 
same  in  cash  from  the  Company. 

A  $50,000  Bribe  for  a  Contract 

How  did  Zimmerman  manage  to  get  this  contract?  The 
Select  Legislative  Committee  reported  that  "  for  his  influence 
and  exertions  in  obtaining  the  contract  for  Zimmerman  and 
Company,  Henry  de  Blaquiere,  one  of  the  directors,  is  dis- 
tinctly proved  to  have  received  a  bribe  of  no  less  a  sum  than 
$50,000  under  this  contract  in  which  the  said  De  Blaquiere 
admits  he  was  a  secret  partner  to  the  extent  of  one-half  of  the 
profits."  2r 

The  directors  of  the  Woodstock  and  Lake  Erie  Railway  is- 

2TThe  full  report  and  testimony  are  published  in  Journals  of  the 
Legislative  Assembly,  Province  of  Canada,  1857,  Appendices  to  the 
1 5th  Vol.,  Appendix  No.  6. 


FIRST   PERIOD  OF   RAILWAY   PROMOTERS  IQ7 

sued  assurances  that  the  £250,000  of  the  railway's  stock  had  all 
been  paid  up.  They  engaged  two  agents,  one  of  whom  was  a 
clergyman,  to  carry  these  tidings  to  the  various  municipalities 
along  the  line,  and  prevail  upon  those  municipalities  to  invest 
in  the  railway  in  the  form  of  loan  subsidies.  The  people  of 
those  municipalities  were  gravely  assured  that  there  could  be 
no  possible  failure  to  pay  back  the  municipal  loans ;  the  Com- 
pany, they  were  told,  was  backed  by  men  of  undoubted  good 
faith.  The  municipalities  in  question  were  further  assured 
that  the  loans  asked  for  would  reach  only  one-half  of  the  cost 
of  construction. 

Fraud  and  Bribery 

The  exchequers  of  various  municipalities  were  opened  up, 
and  out  came  loans  to  the  Woodstock  and  Lake  Erie  Railway 
totaling  £145,000  ($725,000).  As  a  matter  of  fact,  the  Select 
Committee  reported,  the  representations  so  made  by  the  Com- 
pany's agents  were  all  false  and  fraudulent.  Little  of  the  stock 
had  been  paid  up ;  and  after  they  obtained  the  municipal  loans, 
the  Company's  directors,  without  letting  the  municipalities 
know  the  fact,  changed  the  contract  from  a  cash  to  a  credit 
basis. 

The  Township  of  Windham  was  one  of  the  municipalities 
induced  to  give  a  loan  of  $100,000.  How  came  it  that  this  ob- 
scure, rustic  place  was  so  extremely  generous?  The  Reeve  (or 
Mayor)  of  Windham  was  ostentatiously  doubtful  of  the  ability 
of  so  small  a  community  to  stand  so  large  a  loan.  After  the 
loan  had  been  voted,  it  became  his  duty,  the  Select  Committee 
reported,  "  to  hand  over  to  the  Railway  Company,  under  cer- 
tain conditions,  the  necessary  papers  to  enable  them  to  obtain 
Government  debentures,  under  the  by-law. 

"To  do  this,  the  Reeve  appeared  to  have  what  he  called 
'  scruples/  .  .  .  Means  were  soon  found  to  remove  them.  A 
subcontractor  was  sent  to  him  with  an  envelope  containing  $500 


198  FIRST    PERIOD    OF    RAILWAY    PROMOTERS 

which  was  quietly  handed  to  him.  The  '  scruples '  were  re- 
moved, and  twenty  minutes  after,  the  necessary  papers  were 
in  the  hands  of  the  Secretary  of  the  Company;  subsequently 
the  messenger  carried  the  Reeve  another  envelope  containing 
an  additional  $500,  one  hundred  of  which  he  deducted  for  his 
own  services  for  negotiating  the  transaction,  and  the  balance 
of  which  he  handed  to  the  Reeve  as  payment  in  full  for  the 
removal  of  his  scruples."  28 

Plunder  on  Construction  Work 

The  Woodstock  and  Lake  Erie  Company's  directors  now 
made  some  appearance  of  construction  work  to  distract  atten- 
tion from  their  frauds.  In  1854  the  contractors  suspended 
work.  Up  to  this  time  the  subcontractors  had  received  £87,- 
ooo  (whether  English  or  Provincial  currency  is  not  stated), 
yet  they  had  done  only  about  £32,000  worth  of  work.29  Some 
of  the  directors  boldly  grafted  large  sums.  They  caused  the 
railway  to  be  surveyed  over  much  of  their  own  land  which 
they  had  bought  cheap  or  got  for  nothing,  and  they  now  made 
the  municipalities  pay  them  heavily  for  it.  For  a  worn-out 
brick  yard  the  Company  paid  £5,ooo.30 

Something  had  to  be  done  in  Parliament  and  speedily,  or 
else  the  charter  would  be  automatically  forfeited  by  the  time 
limit  expiring.  A  bill  was  lobbied  through,  granting  an  ex- 
tension of  time. 

Mr.  Buchanan  Gives  a  $100,000  Bribe 

It  was  at  this  point  that  a  rich  Hamilton  merchant  of  wide 
commercial  interests,  namely,  Isaac  Buchanan,  came  forward. 

28  Journals  of  the  Legislative  Assembly,  etc.,  1857,  Appendix  No.  6 
to  the  isth  Vol.     (The  pages  of  this  document  are  not  numbered.) 

29  Ibid. 


FIRST    PERIOD   OF   RAILWAY   PROMOTERS  IQQ 

Buchanan  was  a  noted  politician,  serving  for  a  time  as  member 
of  the  Canadian  Parliament  and  as  President  of  the  Executive 
Council.  Presently  he  announced  that  he  had  control  of  the 
Woodstock  and  Lake  Erie  Railway.  The  Select  Legislative 
Committee  described  the  mode  he  used  in  getting  control. 

"  It  simply  consisted,"  that  Committee  reported,  "  in  the  giv- 
ing of  a  direct  bribe  of  $100,000  to  obtain  the  removal  of  three 
of  the  Directors,  and  the  substitution  in  their  stead  of  three 
of  his  own  nominees,  he  having  previously  succeeded  in  se- 
curing without  purchase  the  remaining  four  to  accede  to  and 
aid  him  in  carrying  out  his  plans  for  the  transference  of  the 
charter  to  a  rival  company."  31 

For  a  while  there  was  "  a  life  and  death  struggle  "  between 
Buchanan  and  Zimmerman,  and  litigation  a  plenty,  but  they 
united  their  interests,  and  after  Zimmerman's  death  the  inter- 
ests of  both  were  represented  by  the  new  board  of  directors 
consisting  of  such  "  high  social  lights  "  as  Buchanan,  Thomas 
G.  Ridout,  James  C.  Street  and  others. 

More  Bribery 

Buchanan  now  had  the  eastern  line  for  the  projected  Great 
Southern  Railway.  He  at  once  set  about  getting  the  western. 
There  was  a  chartered  railway  called  the  Amherstburg  and  St. 
Thomas  Railway  promoted  by  members  of  Parliament  in  1852. 
The  value  of  its  charter  consisted  in  supplying  an  extension  of 
the  Woodstock  and  Lake  Erie  Railway  westward. 

According  to  Buchanan's  story  before  the  Select  Committee, 
a  group  of  American  capitalists  of  the  New  York  Central  Rail- 
way and  the  Michigan  Central  had  sought  to  get  control  of  a 
southern  railway  through  Ontario,  and  that  if  they  were  suc- 
cessful, they  would  seriously  compete  with  the  Great  Western 
Railway  in  which  he,  Buchanan,  was  "  heavily  interested." 

31  Ibid. 


2OO  FIRST    PERIOD   OF    RAILWAY    PROMOTERS 

Buchanan  insisted  that  in  his  aim  to  thwart  those  American 
capitalists,  he  had  the  support  of  all  of  the  Great  Western 
Railway  Company's  directors  except  Brydges.  On  the  other 
hand,  it  was  alleged  that  Buchanan's  sole  object  was  to  "  hold 
up  "  the  Great  Western,  and  force  it  to  buy  the  Great  South- 
ern project  from  himself  at  an  exorbitant  price. 

How  Buchanan  acquired  control  of  the  Amherstburg  and 
St.  Thomas  Railway  scheme  was  described  by  the  Select  Leg- 
islative Committee. 

Peculiarly  Humiliating  and  Painful 

"  While  devising  means  to  this  end,"  the  Committee  re- 
ported, "  a  Mr.  Van  Voorhis  comes  most  opportunely  to  his 
[Buchanan's]  relief  with  a  suggestion  made  by  Mr.  Hodge 
that  for  a  consideration  the  coveted  object  could  be  obtained. 
Mr.  Buchanan,  after  a  little  prudent  consideration,  determined 
as  to  the  sum  to  be  offered,  and  the  proposition  of  Mr.  Bu- 
chanan [sic]  being  reduced  to  writing,  Mr.  Buchanan  accepts. 
The  negotiations  being  concluded,  Mr.  De  Blaquiere,  who  up 
to  this  point  appears  only  in  the  background,  steps  in,  receives 
$100,000,  and  then  with  his  two  brother  directors  withdraws 
and  allows  Mr.  Buchanan  and  his  two  nominees  to  take  their 
places;  Mr.  Van  Voorhis  as  the  negotiator  between  the  two 
parties  receiving  for  his  services  an  undertaking  that  he  shall 
have  a  preference  contract  of  35  miles  of  road.  Whether  or 
not  others  shared  in  the  profits  of  this  shameless  transaction, 
your  Committee  have  not  been  able  certainly  to  ascertain."  32 

The  next  move  was  to  get  a  Bill  passed  by  Parliament  amal- 
gamating the  Woodstock  and  Lake  Erie  Railway  and  the  Am- 
herstburg and  St.  Thomas  Railway 

"...  That  gross  wrong,"  the  Select  Committee  concluded 

32  Ibid.  The  testimony  upon  which  the  committee  based  its  findings 
was  extremely  specific  and  voluminous. 


FIRST    PERIOD   OF   RAILWAY   PROMOTERS  2OI 

its  report,  "  has  been  practiced  by  parties  officially  and  in  other- 
wise in  connection  with  the  said  Company,  is  fully  established, 
and  that  those  concerned  in  the  perpetration  of  such  wrong 
are  individuals  who  have  been  hitherto  occupying  high  and 
honorable  positions  in  society  and  public  stations,  is  a  circum- 
stance of  a  peculiarly  humiliating  and  painful  character." 

But  the  Select  Committee's  report  did  not  reveal  all  the 
prevailing  corruption.  More  was  disclosed  in  the  evidence  it- 
self and  in  the  Parliamentary  debates.  One  member  of  Parlia- 
ment, it  appeared,  stood  out  for  a  considerable  bribe  in  connec- 
tion with  Great  Southern  Railway  charter  matters,  nor  was 
he  the  only  member  implicated  in  the  disclosures.33 

The  Great  Western  Eulogizes  Itself 

Buchanan  had  testified,  as  we  have  seen,  that  his  motive  was 
to  get  for  the  Great  Western  Railway  the  control  of  the  South- 
ern Railroad  from  the  Niagara  to  the  Detroit  River.  The 
Great  Western  Railway  Company,  he  said,  having  done  its 
best  to  prevent  the  passage  of  the  charter,  had  wanted  to  get 
control  of  the  competitive  line  to  obviate  the  necessity  of  double 
tracking  its  own  line.  The  Great  Western  Railway  Company 
repudiated  this  alleged  object,  and  more  than  intimated  that 
a  "  hold-up  "  was  attempted  upon  it. 

With  a  great  air  of  virtue,  the  directors  of  the  Great  West- 
ern Railway  now  came  forward  with  a  jibe  at  their  projected 
competitor,  the  Great  Southern  Railway. 

They  reported  in  1857  that  "  during  the  last  twelve  months 

33  The  president  of  the  Amherstburg  and'  St.  Thomas  Railway 
Company  in  1857  was  Arthur  Rankin,  a  member  of  the  Parliament 
of  the  Province  of  Canada,  and  the  Company's  vice-president  was  G. 
Macbeth,  another  member  of  Parliament.  Rankin  made  a  claim  for 
£25,000  from  Zimmerman's  estate  for  certain  services  rendered,  pre- 
sumably by  him  (Rankin)  as  a  member  of  the  Railway  Committee  of 
the  House. —  See,  Journals  of  the  Legislative  Assembly,  1857,  Ap- 
pendices to  isth  Vol.,  Appendix  No.  6. 


202  FIRST   PERIOD   OF   RAILWAY  PROMOTERS 

considerable  discussion  has  arisen  in  regard  to  the  projected 
Southern  Line  through  Canada,  which  last  summer  [was] 
attempted  to  be  forced  upon  this  Company.  In  the  last  ses- 
sion of  the  Provincial  Legislature  many  disgraceful  disclosures 
were  made  as  to  the  past  history  of  that  scheme  arising  out  of 
the  rival  claims  of  certain  parties  to  the  control  of  the  line. 

"  These  disclosures  showing  an  extent  of  bribery  and  dis- 
honesty which  have  rarely  been  paralleled  in  the  history  of  any 
joint  stock  undertaking  .  .  .  cannot  fail  to  increase  the  satis- 
faction of  the  shareholders  that  this  Company  was  preserved 
from  any  connection  with  the  scheme."  34 

When  this  report  was  made  the  Great  Western  Railway 
was  headed  partly  by  British  capitalists  and  partly  by  Can- 
adian politicians:  Robert  Gill  of  England  was  its  president; 
John  Young  of  Hamilton,  Ont.,  its  vice-president,  and  its  two 
secretaries  were  British  and  Canadian. 

For  the  time,  the  Great  Southern  Railway  scheme  had  to  be 
suspended ;  the  operations  of  its  promoters  caused  such  a  wide 
scandal  that  legislators  discreetly  refrained  from  sanctioning 
further  powers.  But  it  was  subsequently  revived  as  the  Canada 
Southern  Railway,  and  became  an  accomplished  fact.  The 
control  was  later  acquired  by  the  Vanderbilts,  the  American 
railway  magnates  owning  the  New  York  Central  Railway,  the 
Michigan  Central  and  other  lines.  The  Canada  Southern  Rail- 
way later  was  owned  and  controlled  by  the  Vanderbilts,  J.  P. 
Morgan,  William  Rockefeller  and  other  American  magnates. 

It  is  a  noteworthy  fact  that  at  the  very  time  Buchanan  was 
doing  his  bribery,  Commodore  Cornelius  Vanderbilt,  the 
founder  of  the  great  Vanderbilt  fortune,  was  amassing  his 
original  millions  by  a  huge  system  of  commercial  blackmail  on 
competing  steamship  lines,  the  exact  facts  as  to  which  (citing 
official  documents  and  court  records),  are  related  specifically 
in  the  History  of  the  Great  American  Fortunes. 

s*  Trout's  Railways  of  Canada,  1871,  pp.  88-89.      ' 


FIRST    PERIOD   OF   RAILWAY   PROMOTERS  203 

Some  More  Unpleasant  Disclosures 

But  the  foregoing  were  by  no  means  the  only  railway  scan- 
dals developing. 

Reports  and  charges,  exceedingly  embarrassing  to  certain 
government  functionaries,  were  current  in  1858;  and  a  Select 
Standing  Committee  of  Public  Accounts  was  ordered  to  inves- 
tigate. 

The  chairman  of  this  committee  was  A.  T.  Gait.  This  gen- 
tleman had  been,  as  we  have  seen,  the  Canadian  executive  of 
the  British  American  Land  Company,  the  affairs  of  which  he 
had  converted  into  "  a  highly  profitable  state."  He  had  been 
a  prime  owner  of  the  St.  Lawrence  and  Atlantic  Railway, 
which,  as  we  have  seen,  became  part  of  the  Grand  Trunk  Rail- 
way system.  He  was,  also,  as  previously  noted,  a  promoter  of 
the  Grand  Trunk  Railway  of  Canada,  and  a  Grand  Trunk  con- 
tractor. Another  member  of  the  Committee  was  Hon.  Wil- 
liam Cayley,  member  of  Parliament.  As  Inspector-General 
(Finance  Minister),  one  of  Cayley's  functions  was  to  borrow 
money  for  the  Provincial  debts. 

Examined  on  June  8,  1858,  Cayley  reluctantly  gave  this  tes- 
timony :  That  he  had  advanced  £10,000  of  Government  money 
to  the  Cobourg  and  Peterboro  Railway  Company ;  that  he  was 
not  a  stockholder,  but  that  at  one  time  —  in  1856  —  he  held 
bonds  in  the  railway,  and  that  the  loan  to  the  Company  was 
under  negotiation  two  or  three  months  previously.  The  presi- 
dent and  lessee  of  this  railway,  Cayley  testified,  was  D'Arcy 
Boulton,  with  whom  he  was  connected  by  marriage.  (Boul- 
ton,  it  may  be  interpolated,  had  been  Mayor  of  Cobourg  in 
1853,  and  later,  as  a  member  of  Parliament  had  put  an  Act 
through  that  body  chartering  the  building  of  this  railway ;  he 
later  became  president  of  the  Midland  Railway.)  The  inter- 
rogator was  curious  to  know  whether  Boulton,  as  lessee  of  the 
Cobourg  and  Peterboro  Railway,  had  paid  the  rent  in  depreci- 


2O4  FIRST    PERIOD   OF   RAILWAY   PROMOTERS 

ated  bonds,  and  whether  Cayley  had  supplied  him  with  the 
bonds?  Cayley  admitted  that  he  had  sold  some  bonds  —  "Be- 
tween £4,000  and  £5,000  worth  of  them  —  to  Boulton,  for 
which  Boulton  had  paid  him  chiefly  in  land;  Boulton's  uncle 
was  the  Hon.  Peter  Robinson,  Commissioner  of  Crown  Lands. 

More  transactions  were  then  uncovered.  Cayley  testified 
that  out  of  the  sums  that  the  Grand  Trunk  Railway  had  re- 
ceived from  the  Government  under  the  specific  Act  of  1856, 
that  Railway  Company  had  advanced  large  sums  to  other  rail- 
way companies  having  no  legal  connection  with  it,  and  ap- 
parently separate  roads.  To  the  Port  Hope  and  Lindsay 
Railway  (later  the  Midland  Railway),  £13,000  had  been  ad- 
vanced, and  similar  large  advances  were  made  to  other  rail- 
ways, yet  Cayley's  published  accounts  contained  no  reference 
to  these  transactions  in  which  public  funds  were  freely  used.33 

In  a  written  statement  handed  in  to  the  Committee,  on 
June  10,  1858,  Cayley  stated  that  the  advances  made  by  him 
to  certain  railway  companies  were  sanctioned  by  an  Order-in- 
Council  which  provided  that  the  securities  given  in  exchange 
were  to  be  reported  and  passed  upon  by  Solicitor-General  Smith 
of  Upper  Canada,  acting  for  the  Government.  Questioning 
brought  out  the  fact  that  at  that  identical  time  Smith  received 
a  fee  of  £100  of  railway  company  funds  for  professional  serv- 

35  Appendix  to  the  i6th  Vol.,  Journals  of  the  Legislative  Assembly 
of  Canada,  1858,  Vol.  XVI,  No.  4,  p.  H.,  etc.  Bank  funds  were  like- 
wise profusely  used  by  the  railway  promoters.  T.  G.  Ridout,  Cashier 
of  the  Bank  of  Upper  Canada,  testified  that  that  bank  had  advanced, 
on  the  recommendation  and  authority  of  the  Government,  nearly 
£60,000  to  the  promoters  of  the  Cobourg  and  Peterboro  Railway 
and  the  Ottawa  and  Prescott  Railway.  If,  said  Ridout,  these  two 
companies  should  fail  to  give  the  Grand  Trunk  Railway  Company 
satisfactory  security  for  the  repayment  of  the  money,  the  bank  would 
have  a  fair  claim  against  the  Government. 

Some  years  later  the  Bank  of  Upper  Canada  failed  in  a  large 
crash.  Its  funds  had  been  absorbed  to  an  immense  extent  by  ad- 
vances to  "  land  speculators,  politicians,  adventurers  and  men  of  that 
gentlemanly  type  who,  though  in  business,  scorn  to  soil  their  fingers 
with  its  details." 


FIRST    PERIOD   OF   RAILWAY   PROMOTERS  2O5 

ices.36  Cayley  gave  much  other  illuminating  testimony,  not 
the  least  interesting  of  which  was  his  statement  that  the  presi- 
dent of  the  Grand  Trunk  Railway  Company  was  his  colleague, 
the  Receiver-General  of  the  Province.37 

It  was  in  this  very  year,  and  only  two  months  after  giving 
this  testimony,  that  Cayley  was  influential  in  having  the  Bank 
of  Canada,  a  private  institution,  incorporated  by  Act  of  Parlia- 
ment, and  he  himself  headed  the  list  of  incorporators. 

Funds  Lifted  Out  of  the  Public  Treasury 

Perhaps,  however,  the  most  incisive  testimony  was  that,  on 
June  14,  1858,  of  Auditor-General  John  Langton :  — 

Q.  379.  "  Was  £16,083,  6s.,  8d.,  drawn  directly  from 
the  public  chest  in  the  year  1857,  and  lent  to  the  Cobourg  and 
Peterboro  Railway  Company  ?  " 

A.     "  It  was." 

Q.  380.  "  Had  Parliament  given  any  authority  for  ap- 
plying the  Provincial  money  in  such  a  manner?  " 

A.     "  Not  that  I  am  aware  of." 

Q.  385.  "  Was  £160,000  drawn  directly  from  the  pub- 
lic chest  in  the  year  1857,  and  lent  to  the  Grand  Trunk  Railway 
Company  ?  " 

A.     "  It  was." 

Q.  386.  "  Had  Parliament  given  any  authority  for  ap- 
plying the  Provincial  money  in  such  a  manner  ?  " 

A.     "  I  am  not  aware  that  it  had." 

Q.     387.     "  Was  the  money  restored  to  the  chest  in  1857  ?  " 

A.     "  No."  38 

36  Ibid.,  Questions  Nos.  333  and  334. 

37  Ibid.,  Question  No.  342.    Cayley  was,  and  became  still  more  so,  a 
prominent  corporation  capitalist.    Twenty  years  later  we  find  him  a 
director  of  the  Dominion  Telegraph  Company  of  which  Swinyard  was 
Managing  Director. 

38  Ibid.    That  such  instructive  facts  were  brought  out  was  due  to 


2C>6  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

It  was,  however,  later  returned,  Langton  stated,  as  also  was 
that  advanced  to  the  Cobourg  and  Peterboro  Railway  Company 
—  restorations  no  doubt  opportunely  stimulated  by  the  inves- 
tigating committee's  inquisition. 

Loans  Turn  Out  To  Be  Mostly  Worthless 

Among  divers  other  findings,  the  Select  Standing  Com- 
mittee of  Public  Accounts  reported  that  of  £35,538  thus  loaned 
to  incorporated  companies,  little  or  none  would  ever  be  recov- 
ered, as  the  security  was  worthless.  The  Quebec  Turnpike 
Trust  was  in  possession  of  £33,882  of  public  money  and  had 
never  paid  one  shilling  of  interest.  The  Province  of  Canada 
had  paid  £88,274  on  bonds  of  the  Ontario,  Simcoe  and  Huron 
Railway,  without  adequate  security.  The  Great  Western  Rail- 
way Company,  although  in  receipt  of  large  revenues,  had  paid 
no  interest  to  the  Government  on  advances, —  and  so  the  find- 
ings ran  on,  telling  in  official  terminology  of  the  methods  by 
which  the  public  funds  had  been  indiscriminately  placed  at  the 
disposal  of  certain  railways  and  other  favored  companies.  All 
of  these  corporations,  it  need  hardly  be  said,  were  promoted, 
largely  owned  and  directed  by  prominent  Canadian  politicians. 

The  fact  was  also  established  that  £500,000  of  Government 
debentures  had  been  sold  in  England  at  99*4  when,  at  the  same 
time,  the  quotation  prices  of  the  stock  exchange  for  those 
bonds  were  105  to  107.  This  transaction  caused  a  large  loss 
to  the  Province  of  Canada.  The  additional  fact  was  brought 
out  that  a  certain  Parliamentary  supporter  of  the  Government 
sold  to  the  Government  £20,000  of  Hamilton  debenture  bonds 
at  97?4>  although  in  the  market  their  quotation  was  only  80; 
by  this  operation  the  Government  favorite  pocketed  a  profit 
of  $17,500. 

unsparing  and  persistent  questioning  by  George  Brown,  a  member  of 
the  Committee. 


FIRST    PERIOD   OF  RAILWAY   PROMOTERS  2O7 

A  Defeated  Resolution 

Now  came  a  much-commented  upon  action  on  the  part  of  a 
majority  of  the  Public  Accounts  Committee.  At  a  meeting 
on  March  22,  1859,  one  of  its  members,  Foley,  offered  a  reso- 
lution condemning  the  practice  on  the  part  of  Government 
functionaries  of  overriding  the  law  by  granting  to  individuals, 
on  various  pretenses,  large  sums  of  money,  not  only  unauthor- 
ized by  law  but  in  direct  contravention  of  law.  This  resolu- 
tion was  promptly  consigned  to  limbo  by  a  vote  of  6  to  3.  One 
of  those  voting  against, it  was  A.  T.  Gait.39 

Without  mentioning  this  circumstance  of  the  resolution, 
Dent,  however,  inadvertently  gives  the  explanation.  "  It  had 
come  to  light,"  he  narrates,  "  that  in  the  year  1859,  a  sum  of 
$100,000  had  been  advanced  from  the  public  chest  by  Mr. 
Gait,  then  Minister  of  Finance  in  the  Cartier-Macdonald  Gov- 
ernment,40 to  redeem  bonds  given  by  the  City  of  Montreal  to 
the  St.  Lawrence  and  Atlantic  Railway  Company.  By  an 
arrangement  entered  into  after  their  issue,  these  bonds  had 
been  made  redeemable  by  the  Grand  Trunk,  to  which  Com- 
pany the  Provincial  advance  had  really  been  made;  and  this 
had  been  done  without  the  sanction  or  knowledge  of  Parlia- 
ment." 41 

39  See  Appendix  to  ijth  Vol.,  Journals  of  the  Legislative  Assembly, 
Prov.  of  Canada,  Vol.  17,  No.  2,  Appendix  No.  5. 

40  Says    Pope:     "  The   Hon.   Mr.   Ross,    Speaker   of   the    Legislative 
Council  and  a  member  of  the  Government,  had  been  solicitor  for  the 
railway,  and  was  a  shareholder  in  the  road,  as  was  Mr.  Hincks.    Nor 
was  the  Grand  Trunk  without  influence  on  the  left  of  the  Speaker. 
Mr.   Holton  was   largely  interested,   as   was   Mr.   Gait.    Indeed,   that 
gentleman  was  supposed  by  some  members  of  the  Opposition  to  be  so 
closely  identified  with  the  railway,  that  when,  in  1858,  Mr.  Cartier  an- 
nounced the  personnel  of  his  Ministry,  W.  L.  Mackenzie  .  .  .  shouted, 
at  mention  of  Mr.  Gait's  name,  '  Grand  Trunk  Jobber !'..."    Joseph 
Pope's  Sir  John  Macdonald,  Prime  Minister  of  Canada,  Vol.  I,  pp.  110- 
iii.    Gait  was,  in  fact  (as  we  have  seen)  a  member  of  the  contracting 
firm  of  Gzowski  and  Company,  which  constructed  the  Grand  Trunk's 
line  from  Toronto  to  Sarnia. 

41  Dent's  The  Last  Forty  Years:  Canada  Since  the  Union  of  1841, 


2O8  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

As  we  have  seen,  A.  T.  Gait  was  a  chief  promoter  of  the 
St.  Lawrence  and  Atlantic  Railway  and  the  Grand  Trunk 
Railway  of  Canada.  He  was  also,  as  previously  narrated,  a 
member  of  a  Grand  Trunk  Railway  Construction  Company. 
And  it  may  be  said  here  that  he  also  was  concerned  in  other 
enterprises.  He  was  an  original  promoter,  in  1855,  of  the 
Eastern  Townships  Bank.  He  greatly  assisted  in  founding 
the  textile  mills  at  Sherbrooke.  He  became,  in  1869,  a  lead- 
ing promoter  of  the  Sherbrooke,  Eastern  Townships  and  Ken- 
nebec  Railway,  chartered  in  that  year.42  Subsequently,  he  be- 
came a  proprietor  of  the  coal  lands  at  Lethbridge,  Alberta, 
converting  them  from  public  property  into  his  personal  prop- 
erty, and  becoming  at  once  a  coal  magnate  of  the  first  rank. 
Gait  also  became  president  of  the  Canada  Guarantee  Com- 
pany —  a  large  corporation.43 

The  disclosures  already  made  regarding  the  methods  of  the 
Grand  Trunk  and  other  railroad  promoters  were  serious 
enough.  But  very  soon  came  another  embarrassing  scandal. 

Mail  Subsidies  and  Ministries 

On  August  29,  1863,  the  Montreal  Gazette  published  a  story 
to  the  effect  that  an  attempt  had  been  made  by  Prime  Minister 
John  Sandfield  Macdonald,  aided  by  several  of  his  colleagues, 
to  bribe  the  heads  of  the  Grand  Trunk  Railway  in  Canada  to 
employ  the  Company's  influence  on  behalf  of  the  ministerial 
party  in  the  general  elections  of  that  year.  The  day  following 
the  announcement  of  the  alleged  plot,  the  Hon.  James  Ferrier 
and  C.  J.  Brydges  published  letters  corroborating  several  points 

Vol.  II,  p.  438.  Dent  proceeds  to  tell  how  on  June  14,  1864,  Parlia- 
ment passed  a  resolution  (by  a  vote  of  60  to  58)  censuring  this  trans- 
action, although  fixing  upon  Gait  only  a  culpable  negligence  in  keeping 
the  Provincial  Accounts.  The  passage  of  this  resolution  caused  the 
resignation  of  the  Ministry. 

42  See  Statutes  of  the  Province  of  Quebec,  1869,  pp.  242-243. 

43  See  Monetary  Times,  Feb.  15,  1878,  p.  967. 


FIRST    PERIOD   OF   RAILWAY   PROMOTERS  2OQ 

of  the  alleged  revelations,  and  agreeing  on  the  story  that  on 
the  evening  of  the  day  preceding  the  nomination  of  the  Hon. 
John  Young,  the  ministerial  candidate  opposing  the  Hon. 
Thomas  D'Arcy  McGee,  Macdonald  arranged  to  meet  Ferrier 
at  his  lodgings  in  Montreal  to  discuss  the  long-pending  settle- 
ment of  the  Grand  Trunk  claim  for  carriage  of  the  Canadian 
mails.  Ferrier  claimed  that  Macdonald  distinctly  promised 
that  he  would  make  the  rate  $150  per  mile,  provided  the  Grand' 
Trunk  would  throw  the  weight  of  its  influence  in  the  then  pend- 
ing elections  on  the  side  of  the  Government.  Ferrier's  tele- 
grams to  Brydges,  the  general  manager  of  the  railway,  bore 
out  his  statement  of  the  proposal  made  by  Premier  Macdonald. 
Ferrier  and  Brydges  both  professed  that  they  had  replied 
to  Macdonald  that  they  would  not  depart  from  their  "  policy 
of  absolute  neutrality  in  politics,"  and  they  complained  of  the 
Government's  broken  promises.  It  was  claimed  that  because 
the  officials  of  the  railway  would  not  throw  their  influence  in 
favor  of  the  Government  in  the  elections  that  the  administra- 
tion had  adopted  an  Order-in-Council  making  the  postal  sub- 
sidy to  the  Grand  Trunk  Railway,  $100  instead  of  the  $150 
promised.  Friends  of  the  Government  claimed,  however,  that 
the  Grand  Trunk  was  a  party  to  a  conspiracy  with  the  Opposi- 
tion for  the  overthrow  of  the  Administration.  On  the  day 
following  the  publication  of  the  alleged  scandal,  the  discussion 
of  the  matter  occupied  the  whole  attention  of  the  House  dur- 
ing both  afternoon  and  evening  sessions. 

Grand  Trunk's  Mail  Subsidy 

The  investigation  following  this  particular  scandal  dealt  with 
the  methods  by  which  the  Grand  Trunk  directors,  after  already 
getting  a  large  mail  subsidy,  sought  to  hold  up  the  Government 
for  an  extraordinarily  larger  sum;  at  the  time  that  this  effort 
was  made,  these  directors,  in  fact,  themselves  largely  composed 


2IO  FIRST  PERIOD  OF  RAILWAY   PROMOTERS 

the  very  personnel  of  the  Government  Ministers  and  Parlia- 
mentary leaders  at  one  and  the  same  time. 

The  facts  came  out  in  1864,  after  a  new  Administration  had 
come  in,  when  Postmaster-General  Oliver  Mowatt  reported  in 
response  to  an  order  from  Parliament :  — 

That  shortly  after  assuming  control  of  the  Atlantic  and  St. 
Lawrence  Railway,  the  directors  of  the  Grand  Trunk  Rail- 
way, on  August  17,  1853,  passed  a  resolution  greatly  increasing 
their  charge  for  carrying  mails  from  about  $25  a  mile  to  $110 
a  mile  per  annum. 

"  When  this  resolution  was  passed,"  Mowatt's  report  pro- 
ceeded, "  it  appears  from  the  Minute  made  at  the  time,  that 
the  following  directors  were  present:  —  The  Honorable  John 
Ross  in  the  Chair ;  Hon.  James  Morris,  Hon.  F.  Hincks,  Hon. 
M.  Cameron,  Hon.  Peter  McGill,  E.  F.  Whitmore,  Esq.,  W. 
H.  Ponton,  Esq.,  Col.  Tache  and  Captain  Rhodes.44  The  Hon- 
orable James  Morris  had  been  Postmaster-General  until  the 
i6th  of  August,  1853,  and  the  Honorable  M.  Cameron  became 
Postmaster-General  and  held  the  office  on  the  I7th  of  August, 
the  very  day  of  the  meeting.  The  verbal  intimation  which 
the  Postmaster-General  received,  by  thus  being  present,  seems 
to  have  been  the  only  one  given  him.  No  trace  of  any  written 
communication  has  been  found  in  any  of  the  public  depart- 
ments, nor  so  far  as  appears,  among  the  records  of  the  Com- 
pany." 

An  Agreement  of  Which  There  Was  No  Evidence 

Postmaster-General  Mowatt,  in  his  terse,  dry  way  pointed 
out  the  nature  of  the  process.  Here  were  some  leading  chiefs 
of  the  Government,  one  of  whom  succeeded  another  as  Post- 

44  As  has  already  been  noted,  Ross,  Morris,  Hincks,  Cameron  and 
McGill  were  all  at  various  times  personally  interested  as  stockholders 
in  the  Grand  Trunk  Railway  or  in  various  corporations  the  charters  of 
which  they  had  promoted  through  Parliament. 


FIRST    PERIOD   OF    RAILWAY    PROMOTERS  211 

jx master-General  (the  very  official  having  jurisdiction  over  mail 
subsidies).  They  met  as  directors,  government  or  other,  of 
I  the  Grand  Trunk  Railway,  and  resolved  that  they  "  were  will- 
ing "  to  accept  $110  a  mile.  Then  they  solemnly  dispersed 
:and  immediately  pretended  to  resume  their  separate  functions 
~as  Cabinet  Ministers  and  legislators. 

"  The  undersigned,"  went  on  Mowatt's  report,  "  perceives 
that  the  Honorable  Mr.  Gait,  when  Finance  Minister,  speaks 
of  $i  10  as  '  the  rate  first  agreed  upon  by  the  Government/  But 
the  undersigned  has  failed  to  discover  any  evidence  of  any 
such  agreement.  However,  the  Company  from  the  first,  sent 
in  their  accounts  at  $no  a  mile,  and  continued  doing  so  until 
April,  1861." 

The  raid  was  considered  much  too  audacious.  Other  Gov- 
ernment officials  raised  a  tempest.  Sidney  Smith,  the  Post- 
master-General, in  1858,  denounced  the  $110  rate  demanded 
by  the  Grand  Trunk  and  the  $100  rate  demanded  by  the  Great 
Western  Railway  as  grossly  excessive,  and  a  Committee  of 
the  Executive  Council,  June  18,  1858,  recommended  the  pay- 
ment of  much  less  than  half  of  the  demanded  sums  as  fully 
adequate. 

The  Grand  Trunk's  High  Influence 

"  This  report,"  Mowatt  further  proceeded,  "  was  approved 
by  his  Excellency  in  Council,  on  the  i8th  of  September,  1858. 
Hon.  Mr.  Cartier,  solicitor  for  the  Grand  Trunk  Company, 
was  at  this  time  the  Canadian  Premier,  and  the  Hon.  Mr. 
Ross,  then  president  of  the  Company,  was  at  the  same  time 
president  of  the  Executive  Council.  Mr.  Watkin,  who  after- 
ward became  president  of  the  Company,  in  an  official  letter 
to  the  Provincial  Secretary,  of  29th  Nov.,  1862,  states  that 
Mr.  Ross,  at  the  time  the  Order-in-Council  of  1858  was  sub- 
mitted, protested  against  the  rate  fixed  therein  as  entirely  in- 
adequate, though  he  did  not  formally  oppose  the  proposition, 


212  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

being  (as  Mr.  Watkin  curiously  adds)  '  unfortunately  for  the 
Grand  Trunk  Company,  a  member  of  the  then  Government.'  " 
But  the  Government  "  with  all  its  Grand  Trunk  influences 
established  "  did  allow  a  rate  of  $70  a  mile,  and  this  rate  was 
continued  after  the  overthrow,  in  1862,  of  the  Cartier  Min- 
istry. No  great  trouble  would  have  resulted  had  not  the 
Grand  Trunk  Railway  Company,  in  1862,  "  suddenly  claimed 
an  enormous  amount " —  in  some  cases  $300  to  $850  a  mile. 
Mowatt  incorporated  in  his  report  a  copy  of  the  Company's 
own  prospectus  showing  the  large  number  of  Government  of- 
ficials on  its  list  of  directors  and  shareholders,  and  commented, 
"  But  it  is  a  remarkable  fact  that  while  so  enormous  an  amount 
is  now  claimed  for  postal  services,  and  while  this  prospectus 
constitutes  so  important  a  part  of  the  argument  of  the  Com- 
pany in  support  of  the  claim,  postal  services  are  not  once  al- 
luded to  in  the  prospectus  as  an  item  from  which  any  part  of 
the  probable  revenue  was  to  be  expected." 43  Mowatt  suc- 
ceeded in  having  the  rate  fixed  at  $60  a  mile ;  the  Grand  Trunk's 
claims  were  making  such  a  decided  scandal,  that  the  pushers 
considered  it  prudent  to  drop  their  full  demands. 

Northern  Railway  Loans 

It  is  now  necessary  to  turn  again  to  the  Northern  Railway, 
running  from  Toronto  to  Collingwood.  We  have  already  re- 
lated the  details  of  the  jobbery  at  the  inception  of  this  rail- 
way in  which  Prime  Minister  Hincks  and  Mayor  Bowes  of 
Toronto  were  secret  partners. 

45  For  Postmaster-General  Mowatt's  full  report  see  Sess.  Paper  No. 
28,  Vol.  Ill,  2nd  Sess.  of  the  8>th  Parl.  of  the  Province  of  Canada,  Sess. 
1864.  In  a  private  letter  to  L.  H.  Holton,  February  19,  1862,  George 
Brown,  editor  of  the  Toronto  Globe,  and  a  member  of  Parliament, 
wrote  that,  "  Mr.  Brydges  is  regularly  installed  in  the  Grand  Trunk. 
He  is  trying  to  accomplish  an  increased  subsidy  by  private  arrange- 
ment with  the  members."  See  Life  and  Speeches  of  George  Brown,  p. 
198. 


FIRST   PERIOD  OF   RAILWAY   PROMOTERS  213 

At  the  same  time,  in  1853-1854,  when,  in  order  to  get  rail- 
way legislation  Prime  Minister  Hincks'  approval  first  had  to 
be  obtained,  further  legislation  was  enacted  by  which  the  Gov- 
ernment of  the  Province  of  Canada  advanced  to  the  Northern 
Railway  Company  £475,000  sterling,  constituting  a  first  lien 
upon  the  road.  But  the  Company  did  not  pay  anything  to 
the  Government  of  either  principal  or  interest.  The  Com- 
pany then  underwent  a  metamorphosis  of  reorganization.  In 
1859  an  Order-in-Council  was  issued,  confirmed  by  an  Act  in 
1860,  granting  the  bonded  debt  of  the  Company  priority  both 
in  payment  of  interest  and  security  over  the  Government  lien, 
excepting  about  only  £9,000  of  mortgage  bonds.  By  this  ar- 
rangement the  Government  received  the  scanty  comfort  of  also 
becoming  possessor  of  a  £50,000  second  preference  bond 
in  part  payment  of  interest  then  due  on  the  Government 
lien. 

As  law  now  stood,  the  Company  did  not  have  to  meet  the 
payment  on  the  £475,000  of  the  Government  money  until  it 
had  paid  all  of  the  charges  on  the  £533,900  of  its  own  outstand- 
ing bonds,  the  holders  of  which  were  now  in  possession  of  the 
road.  Eight  years  passed ;  and  then,  in  1868,  they  were  allowed 
to  issue  £150,000  sterling  of  more  bonds,  which  also  were  al- 
lowed priority  over  the  Government  lien. 

These  bonds  were  then  sold  or  distributed  by  the  Company ; 
and  the  practical  effect  of  this  astute  arrangement  was  that, 
to  enable  the  Company  to  obtain  about  £30,000  in  cash,  a  per- 
manent annual  charge  of  £6,000  sterling  was  placed  ahead  of 
the  Government  lien. 

Subtle  Financial  Transactions. 

Then  came  still  another  financial  twisting,  when,  in  1872,  the 
Northern  Railway  leased  the  Northern  Extension  Railway  — 
a  lease  confirmed  by  Act  of  Parliament.  The  involved  manner 


214  FIRST   PERIOD   OF   RAILWAY   PROMOTERS 

in  which  this  lease  was  arranged,  made  any  payment  on  the 
Government  lien  still  more  remote. 

"  An  examination  of  this  lease,"  reported  the  Select  Parlia- 
mentary Committee,  "  disclosed  the  fact  that  arrangements 
were  made  whereby  the  interest  on  debentures  to  be  issued  by 
the  Northern  Extension  was  to  be  paid  by  the  Northern  Rail- 
way, and  charged  *  in  the  nature  of  a  rental  upon  the  earnings 
of  the  line  of  railway  of  the  lessees,  and  to  be  recognized  in 
the  working  expenses  thereof/  As  it  appears  that  £177,600 
of  debentures  and  improvement  bonds  were  issued,  the  effect 
of  this  Act  was  to  place  the  interest  on  this  amount,  being 
about  £10,000  sterling  per  annum,  ahead  not  only  of  the  Gov- 
ernment lien,  but  also  of  all  of  the  Northern  Railway  prefer- 
ence bonds.  .  .  ." 40 

Four  years  later  the  Northern  Railway  owners  were  allowed 
to  extinguish  their  responsibility  for  the  £475,000  Government 
lien  upon  terms  so  favorable  to  them  that  they  themselves  must 
have  been  astonished  at  their  great  success.  These  terms 
were  the  payment  of  £100,000  sterling,  together  with  £2,000 
sterling  interest,  and  £13,500  sterling  as  arrears  of  interest  on 
the  second  preference  bonds  —  making  £115,500  sterling  in 
all.  This  settlement  left  the  Government  still  owner  of  £50,000 
sterling  of  second  preference  bonds,  and  also  entitled  to  £50,000 
sterling  for  third  preference  bonds  and  interest.47 

The  Prime  Minister  Gets  a  Testimonial 

The  self-evident  loss  to  the  Government  was  extensive.  By 
what  persuasive  means  were  some  of  these  various  ends 
brought  about?  What  were  the  specific  influences  brought 
to  bear  upon  members  of  the  Government?  The  nature  of 

46  Report  of  Cyril  Archibald,   Chairman  of  the   Select   Committee, 
Dom.  House  of  Commons,  Appendix  to  Journal,  etc.,   Vol.  XI,  1877, 
Appendix  No.  5,  Sess.  Paper  No.  10,  p.  iv. 

47  Ibid. 


FIRST   PERIOD   OF   RAILWAY   PROMOTERS  215 

some  of  those  methods  were  revealed  by  the  report  of  the 
Select  Parliamentary  Investigating  Committee,  in  1876-1877, 
which  reported :  — 

That  on  November  12,  1869,  Sir  John  Macdonald  (Prime 
Minister  of  Canada  from  1867-1873)  made  a  draft  for  $500  on 
F.  W.  Cumberland,  General  Manager  of  the  Northern  Rail- 
way Company,  which  draft  was  accepted  at  maturity  by 
Cumberland  and  paid  out  of  the  Northern  Railway  funds ;  that 
on  November  18,  1869,  another  such  draft  drawn  by  Mac- 
donald on  Cumberland  was  similarly  paid;  and  that  the  pro- 
ceeds were  used  to  defray  the  election  expenses  of  Sir  Francis 
Hincks,  who  at  that  very  time  was  a  member  of  the  Canadian 
Government. 

The  Committee  further  reported  that  Cumberland,  Hon. 
John  Ross  and  Hon.  John  B.  Robinson  subscribed  to  a  testi- 
monial to  Macdonald;  that  Cumberland  and  Ross  each  gave 
$1,000,  and  Robinson  $500;  and  that  on  January  14,  1871,  a 
check  for  $2,500  was  paid  to  the  Hon.  D.  L.  Macpherson, 
treasurer  of  the  fund,  who  called  at  the  Company's  office  to 
get  the  check ;  and  that  this  check  originally  entered  as  an  asset 
on  the  Company's  books  was  later  changed  "  to  municipal 
bonuses  and  Government  subsidies."  Macdonald  and  Mac- 
pherson denied  that  they  knew  that  the  Company  contributed 
to  the  testimonial. 

The  Committee  itemized  further  sums  that  it  classified  as 
improperly  paid  out  of  the  Northern  Railway  Company's  funds 
—  sums  that  defrayed  the  election  expenses  of  certain 
stated  politicians,  one  of  whom  was  Robinson,  president  of 
the  Northern  Railway  Company.  These  sums  were  entered 
on  the  Company's  books  as  follows :  One-third  to  "  Con- 
tingencies," one-third  to  "  Parliamentary  Expenses,"  and  one- 
third  to  "  Legal  Expenses."  The  committee  reported  various 
other  findings,  one  of  which  was  that  money  had  been  paid 
out  for  stock  in  a  certain  Toronto  newspaper,  at  or  about  pre- 


2l6  FIRST   PERIOD  OF   RAILWAY   PROMOTERS 

sumably  the  very  time  that  Robinson  had  so  engineered  matters 
as  to  get  $200,000  from  the  City  of  Toronto.48 

The  Corrupt  System  Described 

"  Corruption  taints  the  majority  of  railway  enterprises  from 
their  inception  to  completion,"  wrote  David  Mills,  a  member 
of  the  Dominion  Parliament,  and  later  Dominion  Minister  of 
the  Interior.  "  Charters  are  sought,  not  infrequently,  for  the 
purposes  of  speculation.  Sometimes  they  are  used  to  black- 
mail existing  railway  lines.  However  much  a  railroad  is 
needed,  a  charter  is  seldom  obtained  without  difficulty,  and 
stock  is  bestowed  for  Parliamentary  support.  The  names  of 

\  well-known  railway  men  are  sought  to  give  credit  to  the  pro- 
jected enterprise,  a  number  of  shares  are  tendered  them  for 

'  their  '  eminent  services/  and  they  are  seldom  declined. 

"  When  a  railway  scheme  is  finally  launched,  it  finds  a  large 
number  of  friends  —  engineers  and  professional  contractors, 
the  owners  of  rolling  mills,  and  the  builders  of  cars  and  loco- 
motives. The  .getters  of  land  grants,  and  the  traders  in  rail- 
way stocks,  all  come  to  its  aid,  and  it  may  be,  experience  its 
bounty.  These  constitute  the  grand  army  of  a  private  rail- 
way enterprise. 

"  Besides  these,  there  is  a  numerous  band  of  camp  followers, 
who  expect  in  a  variety  of  ways  '  to  reap  where  they  have  not 
sown/  but  about  whose  special  services  nothing  need  be  said. 
It  is  this  numerous  host  of  allies  and  followers  which  '  can 
kill  or  keep  alive '  a  railway  project,  and  because  they  have 
this  power,  must  be  paid,  that  add  to  the  cost  of  every  rival 
railway  undertaking."  In  his  article  Mills  but  stated  a  fur- 
ther well-known  fact  when  he  wrote :  "  In  order  to  pay  in- 

418  Ibid.,  p.  v,  etc.  In  the  Committee's  estimation,  the  impropriety  of 
these  contributions  to  members  of  the  Government,  etc.,  arose  from  the 
fact  that  the  funds  thus  given  were  applicable  to  the  payment  of  the 
Government  lien. 


FIRST   PERIOD  OF   RAILWAY   PROMOTERS  217 

terest  upon  bonds  or  dividends  upon  stocks,  a  road  is  allowed 
to  deteriorate.  Then  come  accidents,  in  which  scores  of  pas- 
sengers are  mangled  or  scalded."  49 

49  Railway  Reform  —  The  Canadian  Pacific  Railway,  by  David  Mills, 
M.  P.,  in  the  Canadian  Monthly  and  National  Review,  Nov.,  1872,  pp. 
438-439. 


CHAPTER  XII 
CONTEST  FOR  THE  PACIFIC  RAILWAY 

When  the  Hudson's  Bay  Company  formally  relinquished,  in 
consideration  of  a  payment  of  $1,500,000  and  a  reservation 
of  one-twentieth  of  the  area  surrendered,  its  claim  upon  the 
vast  territory  from  the  Red  River  to  the  Rocky  Mountains, 
railway  projectors  at  once  saw  an  opportunity  to  transfer  into 
their  private  possession  much  of  this  coveted  region. 

Land  Grants  and  Subsidies  Assured 

The  first  move  to  this  end  was  not  long  in  coming.  On 
April  n,  1871,  Sir  George  E.  Cartier  moved  in  the  Dominion 
House  of  Commons  that  the  House  go  into  Committee  on  a 
resolution  that  a  Pacific  Railway  be  constructed  by  private 
enterprise  and  that  it  be  given  liberal  public  aid  in  grants  of 
land,  money  and  other  modes  of  subsidy.  Gait  supported 
Cartier's  motion,  which  was  adopted.1  Cartier  was  then  so- 
licitor for  the  Grand  Trunk  Railway,  and  Gait,  as  we  have 
seen,  had  been  not  only  a  leading  promoter  of  that  railway, 
but  only  two  years  previously  had,  in  association  with  Charles 
J.  Brydges  and  others,  secured  a  charter  for  the  Sherbrooke, 
Eastern  Townships  and  Kennebec  Railway.2  The  head,  real 
or  titular,  of  the  particular  Company  now  seeking  the  Pacific 
Railway  charter  and  grants  was  Senator  David  L.  Macpherson 

1  Parliamentary  Debates,  Dom.  House  of  Commons,  1871,  Vol.  II,  p. 
1028. 

2  Statutes  of  Canada,  1869,  pp.  242-243. 

218 


CONTEST   FOR   THE   PACIFIC   RAILWAY 

who,  as  we  have  previously  noted,  was  a  member  of  the  con- 
tracting firm  of  Gzowski  and  Company  which  had  constructed 
the  Grand  Trunk  Railway  west  of  Toronto,  and  which  was 
so  large  an  owner  of  the  stock  of  one  of  the  Grand  Trunk's 
chief  subsidiary  lines.  The  Grand  Trunk  Railway  was  now 
controlled  by  an  English  board  of  directors  headed  by  Thomas 
Baring,  Lord  Wolverton  and  others,  and  by  a  Canadian  board 
consisting  of  Bridges,  James  Ferrier  and  William  Molson. 

It  was  evident  that  the  Grand  Trunk  capitalists  intended 
getting  hold,  if  they  possibly  could,  of  this  immensely  valuable 
projected  Pacific  Railway  charter  and  subsidies.  But  they 
quickly  discovered  that  the  rush  for  so  great  a  prize  was  not 
to  be  uncontested.  Another  company  of  capitalists  came  for- 
ward in  hot  competition. 

Sir  Hugh  Allan's  Company 

This  competitive  group  was  headed  by  Sir  Hugh  Allan  of 
Montreal.  Allan  was  one  of  the  most  conspicuous  men  of 
capital  of  his  time;  and  as  the  founder  of  one  of  the  largest 
and  at  present  most  powerful  Canadian  fortunes,  his  career 
deserves  more  than  a  passing  notice.  Sir  Hugh  Montague 
Allan,  son  of  Sir  Hugh  Allan,  today  is  a  dominating  factor 
on  the  board  of  directors  of  nineteen  of  Canada's  large  cor- 
porations. 

A  merchant,  contractor  and  shipbuilder,  Sir  Hugh  Allan 
founded  the  Montreal  Steamship  Company,  or  Allan  Line,  the 
ships  of  which  plied  to  Europe.  It  was  in  about  the  year 
1853,  Morgan  says,  that  through  the  influence  of  John  Ross, 
Cartier,  L.  T.  Drummond  and  other  politicians  in  power  that 
Allan  obtained  ship-building  and  mail-carrying  contracts  from 
the  Canadian  Government.3  From  these  long-continuing  mail 
subsidies,  Sir  Hugh  Allan  gathered  in  enormous  profits.  A 

3  Biographies  of  Celebrated  Canadians  (Edit,  of  1862),  p.  673. 


220  CONTEST  FOR  THE  PACIFIC   RAILWAY 

contract  that  he  secured  from  Postmaster-General  Camp- 
bell in  1869  provided  for  the  payment  to  him  of  £54,500  a 
year  as  mail  subsidy.4  The  great  sums  thus  paid  to  Allan  were 
later  —  on  April  18,  1873  —  the  occasion  of  a  severe  opposi- 
tion on  the  part  of  Holton  in  the  Dominion  House  of  Commons. 

Montreal  Warehouse  Transaction 

By  means  of  his  political  connections  Sir  Hugh  Allan  ob- 
tained other  privileges  and  properties.  He  was  president  of 
the  Montreal  Warehouse  Company,  one  of  the  transactions  of 
which  was  exposed  in  the  Dominion  House  of  Commons. 

According  to  a  statement  there  made  by  Mr.  Holton  on  April 
I,  1871,  the  Government,  in  1865,  had  bought  from  private 
parties  a  tract  of  land  adjoining  the  Lachine  Canal  basin  in 
Montreal.  This  purchase  was  made  on  the  recommendation 
of  Allan  for  the  ostensible  purpose  of  increasing  the  wharfage 
and  shed  accommodation  at  the  place.  After  the  Confedera- 
tion of  the  Provinces  and  the  formation  of  the  Dominion  Gov- 
ernment, the  Montreal  Warehousing  Company  applied  to  the 
Government  for  the  purchase  of  a  lot.  On  the  advice  of  the 
officials  of  the  Public  Works  Department,  the  Government  re- 
fused to  sell  it.  But,  on  July  19,  1870,  when  the  Minister  of 
Public  Works  was  absent,  the  Minister  of  Militia  acting  for 
him  reported  to  the  Council  in  favor  of  granting  the  lease  of 
this  lot  to  the  Montreal  Warehousing  Company  for  the  term 
of  21  years  at  an  annual  rental  of  $700.  This  ridiculously 
small  sum  represented  less  than  the  simple  interest  on  one-half 
the  cost  of  the  land. 

When  Holton  moved  that  the  Government  take  immediate 
steps  to  resume  possession  of  the  land  for  public  uses,  as  con- 
ditionally provided  for  by  a  clause  in  the  lease,  Hector  Lange- 

*  Sessional  Papers,  Dom.  Parl,  1869,  Vol.  II,  No.  5,  Sess.  Paper  No. 
34,  P.  4- 


CONTEST   FOR   THE   PACIFIC   RAILWAY  221 

vin,  Minister  of  Public  Works,  defended  the  transaction.  In 
the  course  of  his  explanation,  Langevin  ironically  described 
a  similar  transaction  by  which  accuser  Holton,  along  with 
Hooker  and  John  Young,  had  themselves  benefited  when,  in 
1851,  they  had  bought  Lachine  Canal  basin  lots  at  public  auc- 
tion from  the  Government.  Young  had  not  only  purchased 
lots  from  the  Government,  but  Holton  and  Hooker  had  also 
sold  him  for  £4,000  the  lots  which  they  had  bought,  "  making 
a  very  handsome  profit  by  the  transaction." 

"A  Very  Nice  Transaction" 

"  Were  you  then  opposed  to  the  Government  selling  this 
land  ?  "  Langevin  in  effect  asked  Holton.  "  The  action  of  the 
Government  at  that  time,"  Langevin  taunted,  "met  the  ap- 
proval of  the  honorable  gentleman,  and  was  a  very  nice  trans- 
action for  him."  Which  it  was,  Holton  admitted,  but  asserted 
that  he  had  opposed  the  Government  sale,  and  only  when  it 
was  held  had  he  stepped  forward  in  his  character,  not  as  a 
member  of  Parliament,  but  "  as  a  merchant  doing  business  in 
Montreal.  I  invested  in  them  as  a  good  speculation."  The 
John  Young  here  referred  to  was  the  eminent  John  Young 
who  at  the  very  time  that  the  foregoing  transaction  was  ac- 
complished was  a  member  of  the  Hincks  Government ;  Young 
was  also  a  pushful  railway  promoter.  Mr.  Mackenzie  bluntly 
declared  of  the  Montreal  Warehousing  Company's  lease 
that  "  the  whole  matter  could  only  be  regarded  as  a  '  job.' " 
Helton's  motion  was  lost.5 

Very  shrewd  was  Sir  Hugh  Allan  considered  in  thus  getting 
this  valuable  land  for  a  mere  pittance  of  a  rental.  While  se- 
curing such  governmental  favors,  Allan  was  reaping  extraor- 
dinary profits  from  the  promotion  of  many  interests.  His 

5  Parliamentary  Debates,  Fourth  Session,  1871,  Vol.  II,  pp.  44  and 
766-770. 


222  CONTEST   FOR   THE   PACIFIC   RAILWAY 

steamship  line  yielded  large  revenues.  If  the  proved  disclo- 
sures that  were  subsequently  made  as  to  the  methods  of  the 
Allan  Line  are  to  be  regarded  as  evidence  of  its  previous 
methods,  then  it  is  fair  to  assume  that  those  methods  were  by 
no  means  new  when  the  Montreal  Witness  newspaper  ar- 
raigned the  Allan  Line  for  the  filth,  overcrowding,  discom- 
fort and  incivility  to  the  herds  of  steerage  passengers  whose 
sufferings  were  coined  into  profits.  This  particular  fact  is 
one  of  court  record. 

The  Allan  Line  sued  the  Montreal  Witness  for  $50,000 
damages  for  alleged  libel ;  and  when  this  case  came  to  trial  in 
1883,  less  than  a  year  after  Sir  Hugh  Allan's  death,  the  jury, 
after  hearing  all  of  the  evidence  during  a  trial  of  eight  days, 
returned  a  verdict  in  favor  of  the  Montreal  Witness  on  all 
counts.  This  verdict  was  considered  all  the  more  conclusive 
inasmuch  as  the  Allan  Line  had  spent  large  sums  in  getting 
evidence  taken  by  a  Commission.6  Severe  comments  were  gen- 
erally made  upon  this  Company  which,  while  drawing  large 
subsidies  from  the  Dominion  Government,  was  thus  indirectly 
proved  guilty  of  flagrant  mistreatment  of  the  most  helpless 
class  of  its  passengers  crowded  under  the  most  pitiful,  in- 
human conditions  down  in  the  steerage. 

Squeezing  of  Laborers 

There  was  no  official  investigation  previous  to  1887  of 
the  treatment  of  its  workers  by  the  Allan  Line;  but  it  is  not 
unreasonable  to  assume  that  the  practices  then  reported  by 
the  "  Royal  Commission  on  the  Relations  of  Capital  and 
Labor"  had  not  been  suddenly  introduced.  The  testimony 
revealed  the  most  oppressive  exploitation  of  its  workers  by  the 
Allan  Line;  many  of  the  longshoremen  were  often  compelled 
to  work  30  to  35  hours  at  a  stretch  for  the  wretched  wages  of 

6  See  Monetary  Times,  Nov.  2,  1883,  p.  491. 


CONTEST   FOR   THE   PACIFIC   RAILWAY  223 

20  cents  an  hour,  and  they  had  to  submit  to  the  meanest  ex- 
actions, besides.7 

"  The  Allan  Line,"  reported  the  Commission,  "  retains  one 
per  cent,  of  the  wages  of  its  employes,  and  with  this  amount  so 
retained  insures  them  in  the  Citizens'  Insurance  Company, 
which,  in  case  of  death,  pays  $500  to  the  heirs  of  the  victim, 
or  $5  a  week  in  case  of  inability  to  work  resulting  from  acci- 
dent. .  .  .  We  find  that  the  longshoremen  of  the  Allan  Line 
pay  a  premium  .  .  .  equivalent  to  an  annual  premium  of  $9.12 
for  a  protection  of  ten  hours  a  day  during  365  days.  An 
accident  insurance  company  of  Montreal  would  give  the  same 
indemnity  .  .  .  upon  a  premium  of  $8.75,  payable  per  quarter, 
and  the  policy  which  it  would  give  covers  not  only  accidents 
happening  during  the  ten  hours  of  the  work  but  all  the  acci- 
dents that  could  happen  during  the  twenty-four  hours  of  the 
day. 

"  The  insurance  system  put  in  force  by  the  Allan  Line  is, 
then,  onerous  for  the  insured  workmen ;  moreover,  it  has  the 
double  effect  of  being  compulsory,  and  of  being  completely 
beyond  the  control  of  those  interested,  who  are  not  in  posses- 
sion of  any  document  establishing  their  claim."  8 

The  president  of  the  Citizens'  Insurance  Company  which 
thus  mulcted  the  workers  of  the  Allan  Line  was  Sir  Hugh 
Allan,  and  he  remained  so  till  his  death,9  when  his  holdings 
went  to  his  family.  Longshoremen  employed  by  the  Allan 
Line  testified  that  no  man  could  get  employment  from  the 
Allan  Company  unless  he  consented  to  this  insurance  scheme.10 

7  Report  of  Royal  Commission  on  the  Relations  of  Labor  and  Capital, 
1889,  Que.  Evidence,  Part  I,  pp.  176-184. 

8  Ibid.,  pp.  20-21.     (Appendix  C.)     The  premium  of  $8.75  referred  to 
by  the  Commission  was  unquestionably  an  annual  premium,  payable  per 
quarter;  the  Commission's  meaning  on  this  point  while  not  clearly  ex- 
pressed, is  evident  enough. 

9  See  Monetary  Times,  Dec.  15,  1882,  p.  657,  giving  a  list  of  corpora- 
tions of  which  Allan  was  president  or  vice-president. 

10  Report  of  Royal  Commission  on  the  Relations  of  Labor  and  Capital, 
1889,  Que.  Evidence,  Part  I,  p.  176. 


224  CONTEST   FOR   THE   PACIFIC   RAILWAY 

Sir  Hugh  Allan,  Foremost  Capitalist 

Multifarious  were  Sir  Hugh  Allan's  financial  and  industrial 
interests.  He  was  president  of  the  Merchants'  Bank  for  which 
he  secured  the  charter  in  1864,  and  he  was  or  became  presi- 
dent of  15  more  corporations  and  vice-president  of  six 
corporations.  These  corporations  comprised  telegraph,  naviga- 
tion, coal  and  iron,  tobacco,  cotton  manufacturing,  sewing  ma- 
chine, cattle,  rolling  mills,  paper,  car,  elevator,  coal  and  other 
companies.  He  was  the  first  president  of  the  Quebec,  Mon- 
treal, Ottawa  and  Occidental  Railroad,  originally  projected  as 
the  Northern  Colonization  Railroad. 

An  aggressive  type  of  capitalist,  Sir  Hugh  Allan  lived  in 
his  "  handsome  residence  of  Ravenscraig,"  and  knighted  "  as 
some  have  supposed  because  he  entertained,  splendidly,  some 
members  of  the  Royal  Family."  A  contemporary  writer 
further  wrote  of  him,  "  Rigid  as  a  martinet,  and  a  stickler  for 
economy  and  system  in  business  matters,  Sir  Hugh  Allan  still 
could  find  time  to  lecture  in  church." 

The  prize  of  the  Canadian  Pacific  franchise  was  one  of  mag- 
nitude. There  they  lay,  immense  domains  of  public  land  all 
ready  to  be  secured  under  color  of  law,  and  there  was  the 
public  treasury  easy  of  access  as  experience  had  proved.  So 
far  as  the  Canadian  Parliament  went,  a  majority  of  its  mem- 
bers could  be  favorably  swayed.  But  what  of  the  Canadian 
people?  Some  strong  argument  was  necessary  for  the  influ- 
encing of  them  to  the  point  where  they  would  agree  that  the 
donation  of  tens  of  millions  of  acres  of  land  and  tens  of  mil- 
lions of  dollars  was  a  patriotic  and  indispensable  act. 

"Give  Generously  and  Patriotically" 

The  railway  promoters  had  their  argument  ready.  They 
pointed  to  the  "  distinguished  liberality  "  of  the  United  States 


CONTEST  FOR  THE  PACIFIC   RAILWAY  225 

Government  and  the  State  Legislatures  in  giving  bountiful 
subsidies  in  lands  and  cash  to  railway  promoters.  Was  the  Ca- 
nadian Government  to  be  less  patriotic? 

In  making  this  plea,  the  Canadian  railway  promoters  omitted 
mentioning  two  facts. 

One  fact  was  that  compared  to  those  of  the  United  States, 
the  population  and  resources  of  Canada  were  poor  and 
meager.  The  second  fact  was  that  virtually  every  subsidy 
and  other  railroad  legislation  in  the  United  States  had  been 
obtained  by  bribery. 

Bribery  in  the  United  States 

Thus,  for  example,  the  projectors  of  the  La  Crosse  and  Mil- 
waukee Railway  corrupted  Wisconsin  legislators  and  influen- 
tial politicians,  State  officials  and  certain  editors  with  bribes 
totaling  $800,000  in  order  to  create  favorable  agitation  and 
consideration  for  an  Act  giving  to  that  railway  company  a  land 
grant  of  about  1,000,000  acres,  valued  then  at  nearly  $18,000,- 
ooo.11 

A  special  committee  of  Congress  was  appointed  in  1857^0 
investigate  charges  of  corruption  in  connection  with  an  Act 
giving  enormous  land  grants  in  Iowa,  Minnesota  and  other 
States  to  the  Des  Moines  Navigation  and  Railroad  Company ; 
the  committee  recommended  the  expulsion  of  four  members 
of  Congress,  reporting  that  one  of  them,  Orasmus  B.  Matteson, 
was  a  leader  of  a  corrupt  combination  and  had  received  for 
disbursement  a  corruption  fund  of  $100,000  and  "  other  valu- 
able considerations."  12 

The  Union  Pacific  Railway  Company  obtained,  in  1864,  the 

11  Report  of  the  Joint  Select  Committee  Appointed  to  Investigate  into 
Alleged  Frauds  and  Corruption,  etc.,  Appendices  to  Wisconsin  Senate 
and  Assembly  Journals,  1858. 

12  Reports  of  Committees,  House  of  Representatives,  Thirty-fourth 
Congress,  Third  Session,  1856-1857,  Report  No.  243,  Vol.  III. 


226  CONTEST   FOR  THE  PACIFIC   RAILWAY 

passage  of  an  Act  giving  it  a  land  grant  of  12,000,000  acres, 
and  also  a  loan  of  $27,213,000  in  Government  bonds.  A 
special  committee  of  Congress  reported  after  investigation,  in 
1873,  that  the  promoters  of  the  Union  Pacific  Railway  had 
expended  a  corruption  fund  of  $436,000  to  get  the  Act  of 
1864  passed,  and  that  another  corruption  fund  of  $126,000  had 
been  used  to  get  a  supplemental  Act  passed  in  i87i.13 

In  the  year  1868  Jay  Gould  and  his  associate  directors  of 
the  Erie  Railway  spent  at  least  $1,000,000  in  corrupting  the 
New  York  Legislature,  and  Cornelius  Vanderbilt,  of  the  New 
York  Central  Railroad,  had  spent  a  large  amount  for  the  same 
purposes.14 

These  are  but  a  few  instances  of  the  frequency  with  which 
bribery  had  been  employed  in  the  United  States. 


American  Capitalists  League  with  Allan 

Associated  with  Sir  Hugh  Allan  in  the  Canadian  Pacific 

Railway  scheme  were  a  choice  group  of  American  capitalists 

-  George  W.  McMullen,  W.  B.  Ogden,  George  W.  Cass,  W. 

G.  Fargo,  the  banking  firm  of  Winslow,  Lanier  and  Company, 

Jay  Cooke  and  others. 

Some  of  these  American  capitalists  such  as  Fargo  were  heads 
of  express  companies;  others  were  railway  promoters  or  of- 
ficials. Scott,  for  instance,  controlled  the  Pennsylvania  Rail- 
road, and  became  the  chief  promoter  of  the  Texas  Pacific 
Railway  project  which  was  accompanied,  in  1876,  by'  such  a 
wide  corruption  of  Congress.  Heading  one  aggressive  group 
of  railway  capitalists  in  the  United  States,  Scott  was  opposed 
by  another  group  headed  by  Collis  P.  Huntington,  the  Central 
and  the  Southern  Pacific  railways  magnate.  These  two  groups 

iz  Reports  of  Committees,  Credit  Mobilier  Reports,  Forty-second 
Congress,  Third  Session,  1872-1873,  Doc.  No.  78,  p.  xvii. 

14  See  History  of  the  Great  American  Fortunes,  Vol.  II,  pp.  310- 
317,  giving  the  official  facts. 


CONTEST   FOR   THE  PACIFIC   RAILWAY  227 

furiously  contested  for  the  division  of  land-grant  and  other 
spoils  in  southwestern  United  States.  Each  side  introduced 
its  Bills  in  Congress,  and  each  effectively,  systematically  set  out 
to  corrupt  Congress.  Both  groups  used  great  sums  of  money 
to  attain  their  ends.15 


He  Tries  to  Unite  Competing  Interests 

The  folly  of  two  companies  competing  for  the  Canadian 
Pacific  charter  and  subsidies  was  evident  to  the  discerning  Sir 
Hugh  Allan.  Why  not  amalgamate  all  conflicting  interests, 
join  in  sharing  the  proceeds,  and  thus  remove  all  antagonisms 
and  cross-purposes  ?  This  was  Allan's  plan,  and  he  tried  hard 
to  bring  it  about.  At  the  same  time  he  sought  by  negotiation  to 
provide  for  every  interest  or  group  that  in  any  way  presented 
themselves  as  obstacles  to  the  consummation  of  his  own  ends. 

"...  A  party  in  the  interest  of  the  Hudson's  Bay  Company," 
Allan  wrote  to  McMullen,  on  December  29,  1871,  "  consisting 
of  Donald  A.  Smith,  D.  Mclnnes,  G.  Laidlaw,  G.  [eorge] 
Stephen,  Daniel  Torrence  (of  New  York),  and  one  or  two 
others  have  given  notice  in  the  Official  Gazette  that  they  will 
apply  for  a  charter  to  make  a  railroad  from  Pembina  to  Fort 
Garry.  That  is  the  only  one  that  affects  us.  .  .  ."  Allan 
wrote  further  that,  "  I  think  we  are  sure  of  Cartier's  opposi- 
tion." Cartier,  that  powerful  politician  and  Cabinet  member 
of  Macdonald's  Ministry,  was  (as  we  have  seen),  solicitor  for 
the  Grand  Trunk  Railway.  Allan  wrote  that  Brydges,  of  the 

15  Huntington  wrote  freely  to  Colton,  an  associate  railway  capitalist, 
of  the  specific  sums  used ;  these  letters  later  came  to  light  in  a  law- 
suit. "  It  is  impossible,"  reported  the  Pacific  Railway  Commission 
after  an  extended  investigation  (Vol.  I,  p.  121  of  its  Report),  "to 
read  the  evidence  of  C.  P.  Huntington  and  Leland  Stanford  and  the 
Colton  letters  without  reaching  the  conclusion  that  very  large  sums  of 
money  have  been  improperly  used  in  connection  with  legislation." 
For  full  details  as  to  this  corruption  see  the  chapter  "The  Pacific 
Quartet"  in  Vol.  Ill,  History  of  the  Great  American  Fortunes,  and 
PP-  572-573  History  of  the  Supreme  Court  of  the  United  States. 


228  CONTEST    FOR   THE   PACIFIC    RAILWAY 

Grand   Trunk,   was  using  all  his  influence   with  Cartier  to 
thwart  the  scheme. 


Seeks  to  Buy  Over  Competitors 

Allan's  next  letter  revealed  the  methods  he  had  in  mind  of 
seeking  to  win  Brydges  over.  On  January  24,  1872,  Allan 
wrote  to  Charles  M.  Smith  and  McMullen  saying  that  his 
(Allan's)  subscription  of  $1,450,000  to  the  stock  of  the  pro- 
posed Canadian  Pacific  Railway  Company  "  includes  the  sum 
of  $200,000  furnished  jointly  by  you  and  myself,  to  be  trans- 
ferred in  whole  or  in  part  to  Mr.  C.  J.  Brydges  on  condition 
of  his  joining  the  organization  and  giving  it  the  benefit  of  his 
assistance  and  influence.  .  .  ." 16 

Brydges,  however,  kept  on  making  trouble,  as  was  shown  by 
a  letter  written  by  Allan,  from  Montreal,  February  23,  1872. 

On  the  next  day,  February  24,  1872,  Allan  wrote  to  Charles 
M.  Smith  of  Chicago,  "  Since  writing  to  you  yesterday,  I  have 
seen  Mr.  D.  L.  Macpherson  of  Toronto,  who  is  a  member  of 
the  Dominion  Senate,  and  rather  an  important  person  to  gain 
over  to  our  side.  He  has  been  applied  to  by  our  opponents, 
and  uses  that  as  a  lever  by  which  to  obtain  better  terms  from 
us.  He  insists  on  getting  $250,000  of  stock,  and  threatens  op- 
position if  he  does  not  get  it.  You  will  remember,  he  is  one  of 
those  I  proposed  as  Directors.  I  will  do  the  best  I  can,  but  I 
think  that  McMullen,  you  and  myself  will  have  to  give  up 
some  of  our  stock  to  conciliate  these  parties."  17 

A  Proposed  Allotment  of  Stock 

Four  days  later,  Sir  Hugh  Allan  wrote  again  to  Charles  M. 
Smith :  "  It  seems  pretty  certain  that  in  addition  to  money 

*6  See  Enclosure  No.  3   (Appendix)   in  Report  of  the  Royal  Com- 
mission, Pacific  Railway,  With  Despatches,  1873,  p.  72. 
p.  73- 


CONTEST   FOR   THE  PACIFIC   RAILWAY  22Q 

payments  the  following  stock  will  have  to  be  distributed :  — 
D.  L.  Macpherson,  $100,000;  A.  B.  Foster,  $100,000;  Donald 
A.  Smith,  $100,000;  C.  J.  Brydges,  $100,000;  J.  J.  C.  Abbott, 
$50,000 ;  D.  Mclnnes,  $50,000 ;  John  Shedden,  $50,000 ;  A.  Al- 
lan, $50,000;  C.  S.  Gzowski,  $50,000;  George  Brown, 
$50,000;  A.  S.  Hincks,  $50,000;  H.  Nathan,  $50,000;  T.  Mc- 
Greevy,  $50,000;  —  total  $850,000.  Please  say  if  this  is 
agreeable  to  you?  I  do  not  think  we  can  do  with  less, 
and  may  have  to  give  more.  I  do  not  think  we  will  require 
more  than  $100,000  in  cash,  but  I  am  not  sure  as  yet.  Who 
am  I  to  draw  on  for  money  when  it  is  wanted,  and  what  proof 
of  payment  will  be  required?  You  are  aware  I  cannot  get 
receipts.  Our  Legislature  meets  on  the  nth  of  April,  and 
I  am  already  deep  in  preparation  for  the  game.  Every  day 
brings  up  some  new  difficulty  to  be  encountered,  but  I  hope 
to  meet  them  all  successfully.  Write  to  me  immediately. 

"  P.  S. —  I  think  you  will  have  to  go  it  blind  in  the  matter  of 
money  —  cash  payments.  I  have  already  paid  $8,500,  and 
have  not  a  voucher  and  cannot  get  one!' 18 

Adroit  a  business  man  as  was  Allan  he  did  not  know  the 
danger  of  committing  his  surreptitious  moves  to  writing.  No 
doubt  he  did  not  harbor  the  remotest  suspicion  that  before  long 
these  very  tell-tale  letters  would  become  public  property.  He 
kept  writing  with  the  greatest  freedom. 

18  Enclosure  No.  3  (Appendix),  Report  of  the  Royal  Commission, 
Pacific  Railway,  etc.,  1873,  pp.  73  and  194.  Italics  in  the  original. 
When  these  letters  became  public,  George  Brown,  editor  and  pro- 
prietor of  the  Toronto  Globe  denied  circumstantially  that  Allan,  in 
proposing  to  set  aside  $50,000  stock  for  him,  acted  with  his  (Brown's) 
authority  or  knowledge.  "  I  have  never  in  my  life,"  Brown  stated, 
"  had  the  slightest  interest,  directly  or  indirectly,  in  any  contract 
or  work  of  any  kind  dependent  on  public  aid,  and  the  Pacific  Railway 
contract  was  certainly  the  last  enterprise  I  could,  under  any  circum- 
stances, have  been  induced  to  touch."  There  is  no  reason  to  doubt 
the  truth  of  Brown's  statement.  It  is  probable  that  the  $50,000  of 
stock  was  thus  proposed  to  be  given  to  Brown  in  the  remote  hope  — 
although  an  abortive  one  —  of  trying  to  buy  off  the  opposition  of 
Brown's  newspaper  —  the  Toronto  Globe. 


23O  CONTEST   FOR   THE   PACIFIC   RAILWAY 

Sir  Hugh  Allan's  Secret  Methods 

On  July  I,  1872,  Allan  wrote  to  an  American  capitalist  in 
New  York  (name  not  revealed)  that  the  cry  "  No  Yankee  dic- 
tation "  had  forced  the  unwilling  and  ostensible  dropping  of 
every  American  name  from  the  scheme.  In  this  letter  Allan 
accused  Cartier  (then  Dominion  Minister  of  Militia  and  De- 
fense, and  at  the  same  time  salaried  solicitor  for  the  Grand 
Trunk  Railway),  of  preventing  the  building  of  an  opposition 
line  from  Montreal  to  Ottawa,  "  and  the  same  reason  made  him 
[Cartier]  desirous  of  giving  the  contract  for  the  Canadian 
Pacific  into  the  hands  of  parties  connected  with  the  Grand 
Trunk  Railway,  and  to  this  end  he  fanned  the  flame  of  opposi- 
tion to  us."  Allan  added  that  Cartier,  the  leader  and  chief  of 
the  French  party,  had  control  of  45  members  of  Parliament 
"  who  have  followed  Cartier  and  voted  in  a  solid  phalanx  for 
all  his  measures."  Inasmuch  as  the  Government  majority  was 
generally  less  than  45,  Allan  said  that  it  was  important  to  win 
over  this  compact  body  of  Cartier's  followers,  and  that  he  had 
taken  measures  to  that  end.  "  As  you  may  suppose,"  Allan 
concluded,  "  the  matter  has  not  reached  this  point  without  great 
expense. —  a  large  portion  of  it  payable  when  the  contract  is 
obtained ;  but  I  think  it  will  reach  not  less  than  $300,000." 

What  means  did  Sir  Hugh  Allan  now  take  to  strike  back  at 
Cartier  ? 

Allan  wrote  further  that,  ".  .  .  means  must  be  taken  to  in- 
fluence the  public,  and  I  employed  several  young  French  writers 
to  write  it  up  in  their  own  newspapers.  I  subscribed  a  con- 
trolling influence  in  the  stock,  and  proceeded  to  subsidize  the 
newspapers  themselves,  both  editors  and  proprietors.  I  went 
to  the  country  through  which  the  road  would  pass,  and  called 
on  many  of  the  inhabitants.  I  visited  the  priests  and  made 
friends  of  them,  and  I  employed  agents  to  go  among  the  prin- 
cipal people  and  talk  it  up.  I  then  began  to  hold  public  meet- 


CONTEST   FOR  THE  PACIFIC   RAILWAY  23! 

ings,  and  attended  to  them  myself,  making  frequent  speeches 
in  French  to  them,  showing  them  where  their  true  interest 
lay.  The  scheme  at  once  became  popular.  I  formed  a  Com- 
mittee to  influence  the  members  of  the  Legislature.  This 
succeeded  so  well  that,  in  a  short  time,  it  had  27  out  of  45 
on  whom  I  could  rely,  and  the  electors  of  the  ward  in  this 
city,  which  Cartier  himself  represents,  notified  him  that  un- 
less the  contract  for  the  Pacific  Railway  was  given  in  the 
interests  of  Lower  Canada,  he  need  not  present  himself  for 
re-election.  He  did  not  believe  this,  but  when  he  came  here 
and  met  his  constituents  he  found,  to  his  surprise,  that  their 
determination  was  unchanged.  He  then  agreed  to  give  the 
contract  as  required.  .  .  ."  19 

"  Now  Wanted  —  $200,000  for  Elections  " 

Sir  Hugh  Allan's  various  methods  were  successful  in  in- 
fluencing Cartier,  for  we  find  Cartier  writing  this  "  private 
and  confidential  "  letter  to  Allan,  July  30,  1872 : 

"  The  friends  of  the  Government  will  expect  to  be  assisted 
with  funds  in  the  pending  elections,  and  any  amount  which 
you  or  your  Company  shall  advance  for  that  purpose  shall 
be  recouped  to  you.  A  memorandum  of  immediate  require- 
ments is  below."  This  memorandum  read: 

"  NOW  WANTED. 

"  Sir  John  A.  Macdonald $25,000 

Hon.   Mr.   Langevin. 15,000 

Sir.  G.  E.  C 20,000 

Sir  J.  A.  (add.) 10,000 

Hon.   Mr.  Langevin 100,000 

Sir  G.  E.  C 30,000."  20 

19  Enclosure  No.  3,  Report  of  the  Royal  Commission,  Pacific  Rail- 
way, etc.,  1873,  pp.  75-76. 

20  Report  of  the  Royal  Commission,  Pacific  Railway,  etc.,   1873,  PP- 
136-137  of  Testimony. 


232  CONTEST   FOR   THE   PACIFIC   RAILWAY 

On  August  7,  1872,  Allan  wrote,  "  I  have  already  paid  away 
about  $250,000,  and  will  have  to  pay  at  least  $50,000  before 
the  end  of  the  month.  I  don't  know  as  even  that  will  finish 
it,  but  hope  so."  2l 

An  Attempted  Fusion 

The  "  great  bribery  scheme  "  engineered  by  Sir  Hugh  Allan 
had  now  reached  the  point  where  it  was  considered  that  the 
machinery  of  Government  was  "  properly  fixed."  There  re- 
mained the  final  necessity  of  attempting  to  unify  the  com- 
peting companies.  On  October  15,  1872,  a  Provisional  Board 
of  Directors  for  the  Canada  Pacific  Railway  Company  was 
formed. 

Heading  this  board  was  Sir  Hugh  Allan  whose  particular 
methods  are  aptly  and  with  the  fullest  candor  described  in 
his  own  correspondence.  The  Hon.  J.  J.  C.  Abbott,  M.  P., 
was  the  second  on  the  list ;  of  Abbott  a  eulogist  wrote,  "  Cap- 
italists who  are  sensitive  to  their  interests,  elected  him  to  the 
Directorship  of  the  most  important  financial  institutions,  not- 
ably the  Citizens'  Insurance  Company,  Merchants'  Bank,  Bank 
of  Montreal  and  Canadian  Pacific  Railway."  This  biographer 
further  wrote  of  Abbott  that,  "  Early  in  his  career  he  had  for 
clients  the  Molsons,  Allans,  Merchants'  Bank  and  Molson's 
Bank,  and,  from  its  inception,  the  Canadian  Pacific  Railway," 
the  solicitorship  of  which  he  later  resigned.  He  refused,  said 
this  writer,  appointment  to  a  chief  justiceship,  possibly  because 
the  receipts  of  his  office  were  many  times  a  judge's  salary.22 

21  Sir  Richard   Cartwright  in  his  recently  published  Reminiscences 
wrote   (p.  377,  Appendix  E)  :     "  It  must  always  be  borne  in  mind,  in 
dealing  with  this  matter,  that  a  contribution  of  $200,000  or  $300,000  for 
election  purposes  meant  a  vast  deal  more  in  the  Canada  of  forty  years 
ago  than   it  would  today.    Looking  at   the  difference  in  population, 
and  still  more  in  available  wealth,  it  is  no  exaggeration  to  say  that  it 
would  almost  equal  a  contribution  of  two  or  three  millions  in  hard 
cash  now." 

22  As  we  have  seen,  Abbott  was  one  of  the  incorporators  of  the 
Chaudiere  Valley  Railway  Company,  chartered  in  1864. 


CONTEST   FOR   THE   PACIFIC   RAILWAY  233 

Other  members  on  the  Provisional  Board  of  Directors  of 
the  Canada  Pacific  Railway  were  Senators  A.  B.  Foster, 
John  Hamilton,  David  Christie  and  James  Skead.  The  Hon. 
Donald  A.  Smith,  representing  a  Manitoba  constituency  in  the 
Dominion  Parliament,  was  on  the  Provisional  Board  of  Di- 
rectors of  the  Canada  Pacific  Railway.  So,  too,  on  the  board, 
were  Hon.  J.  J.  Ross,  M.  P.  and  Legislative  Councillor;  Hon. 
Chief  Judge  Coursol  of  Montreal;  Henry  Nathan,  M.  P.  for 
Victoria,  B.C.;  Andrew  Allan,  brother  of  Sir  Hugh ;  Hon. 
Louis  Archambault,  M.  P.  and  Dominion  Minister  of  Agricul- 
ture, and  sundry  other  members  of  Parliament.23 

That  this  was  a  formidable  combination  of  men  of  political 
and  other  influence  was  fully  recognized. 

Fifty  Million  Acres  and  $30,000,000 

But  this  scheme  failed;  the  Interoceanic  Railway  Company 
refused  to  amalgamate,  and  Allan  was  driven  to  the  necessity 
of  organizing  an  entirely  new  company. 

So  long  as  the  two  big  competing  companies  contesting  for 
the  transcontinental  charter  and  subsidies  had  been  unable 
to  come  to  terms  of  amalgamation,  neither  could  get  anything 
from  the  Dominion  Government.  But  the  formation  of  the 
new  company  by  Sir  Hugh  Allan  settled  the  difficulty.  On 
February  5,  1873,  the  charter  of  this  Company  was  signed 
by  the  Governor-General.  By  the  provisions  of  this  char- 
ter, the  Canadian  Pacific  Railway  Company  pledged  itself  to 
build  the  railway  within  ten  years  from  July  20,  1871,  in  con- 
sideration of  which  it  was  to  receive  a  land  grant  of  50,000,000 
acres,  and  a  subsidy  of  $30,000,000  payable  from  time  to  time 
in  installments.  The  Company  was  allowed  a  capital  of 
$10,000,000. 

23  Report  of  the  Royal  Commission,  Pacific  Railway,  etc.,  Appendix, 
P-  38. 


234  CONTEST   FOR  THE  PACIFIC   RAILWAY 

Charges  of  Bargaining  and  Bribery 

After  the  session  of  Parliament  opened,  Lucius  S.  Hunting- 
ton,  in  the  House  of  Commons,  rose  on  April  2,  1873,  and  in 
effect  accused  Premier  Sir  John  A.  Macdonald  and  the  Gov- 
ernment of  having  sold  the  charter  for  the  Canadian  Pacific 
Railway  in  return  for  a  large  sum  of  money  to  be  used  for 
election  purposes.  Huntington  demanded  an  investigating 
committee;  it  may  here  be  explained,  by  the  way,  that  Hunt- 
ington was  not  a  stranger  to  railway  charters ;  he,  James  Fer- 
rier  and  other  politicians  and  members  of  Parliament  had  been 
the  incorporators  of  the  Missisquoi  and  Black  Rivers  Railway 
Company,  chartered  in  iS/o,24  and  he,  John  Henry  Pope, 
Charles  J.  Brydges  and  others  had  secured,  in  1866,  a  char- 
ter for  the  Waterloo,  Magog  and  Stanstead  Railway  Com- 
pany.25 

At  first  Premier  Macdonald  refused  to  appoint  an  inves- 
tigating committee,  but  subsequently  regarded  it  as  expedient 
to  comply.  In  this  case  the  House  of  Commons  adopted  the 
unusual  procedure  of  itself  choosing  the  investigating  com- 
mittee. 

This  committee  was  droning  along,  without  any  effect,  when 
suddenly  Huntington  published  a  series  of  telegrams  and  let- 
ters written  by  Sir  Hugh  Allan ;  from  some  of  these  we  have 
already  given  extracts.  "  It  has  never  been  clearly  explained," 
Sir  Richard  Cartwright  wrote,  "  how  and  why  Sir  John  al- 
lowed these  very  compromising  letters  of  Sir  Hugh  Allan 
and  others  to  fall  into  his  enemies'  hands  when  he  could  ap- 
parently have  got  possession  of  them  by  paying  a  compara- 
tively small  sum  of  money.  He  may  have  thought  the  offer 
was  a  trap.  I  do  not  know,  and  the  reason  remains  more  or 
less  of  a  mystery,  the  more  so  as  Sir  John  showed  in  other 

2*  Statutes  of  the  Province  of  Quebec,  1870,  pp.  118-119. 
25  Statutes  of  the  Province  of  Canada,  1866,  p.  514. 


CONTEST   FOR   THE   PACIFIC   RAILWAY  235 

ways  that  he  was  in  a  temper  to  stop  at  nothing  if  he  could 
escape  a  hostile  verdict."  2Q 

But  who  was  it  that  supplied  the  incriminating  McMullen 
correspondence?  If  the  statements  made  in  the  Dominion 
House  of  Commons,  on  April  24,  1877,  by  Mr.  Haggart,  are 
to  be  credited,  the  informer  who  thus  turned  against  Mac- 
donald's  Government,  was  the  Hon.  A.  B.  Foster.  "  It  was 
a  notorious  fact,"  said  Haggart,  "  that  the  information  used 
to  turn  out  the  late  Government  was  furnished  by  the  Hon. 
A.  B.  Foster,  and  everybody  expected  that  the  honorable 
gentleman  would  receive  his  reward  for  same.  And  he  did. 
The  manner  in  which  the  contracts  for  the  Georgian  Bay 
Branch  and  the  Canada  Central  Railway  were  let  showed  it." 
Haggart  described  the  affair  as  a  "  disgraceful  transac- 
tion." 27 

The  publication  of  Allan's  correspondence  made  a  wide- 
spread stir  and  uncommon  sensation  except,  as  Governor- 
General  Lord  Dufferin  cynically  wrote,  in  that  "  section  of 
society  within  politics,  whose  feeling  may  be  stimulated  by 
other  considerations."  28 

A  Royal  Commission  was  now  appointed  to  investigate. 

The  Evidence  and  Disclosures 

According  to  McMullen's  statement,  the  only  members  of 
the  Government  with  whom  he  and  the  other  promoters  dealt 
were  Macdonald  and  Finance  Minister  Sir  Francis  Hincks; 

26  Reminiscences,  p.  105. 

27  Debates  in  the  House  of  Commons,  1877,  Vol.  Ill,  pp.  1700  and 
1789-1790.     In   1871   Foster  had  bought  the  rights  of  a  Mr.  Bolckow 
in  the  Brockville  and  Ottawa  Railway  and  the  Canada  Central  Rail- 
way, and  he  also  purchased  large  quantities  of  rails.     He  was  to  pay 
$2,000,000  in  installments,  but  could  not  meet  his  obligations,  and  suf- 
fered financial  reverses  in  1877.    At  the  instance  of  competitive  Ameri- 
can contractors  he  was  imprisoned  for  a  trivial  debt  of  a  few  dollars. 
He  died  shortly  afterward. 

28  Dispatch  of  August  18,  1873. 


236  CONTEST   FOR   THE   PACIFIC   RAILWAY 

that  Hincks  visited  New  York  in  the  early  part  of  August, 
1871,  and  at  interviews  with  two  prominent  railway  bankers, 
had  advised  them  and  their  associates  to  cease  negotiations 
with  C.  W.  Smith  and  himself  (McMullen),  and  to  open 
them  directly  with  Sir  Hugh  Allan.  McMullen  further  stated 
that  Hincks  later  told  him  (McMullen)  of  Carder's  Grand 
Trunk  jealousy  of  Allan.  Large  levies  of  funds,  McMullen 
said,  were  levied  on  the  American  capitalists  by  the  pro- 
moters.29 Daniel  Y.  McMullen,  a  brother  and  partner  of 
George  W.  McMullen,  gave  corroborative  testimony. 

Sir  John  A.  Macdonald  was  called  as  a  witness ;  as  we  have 
previously  noted,  Macdonald  had,  nearly  twenty  years  before, 
been  an  incorporator  of  various  companies,  and  he  had  been 
connected  with  the  Trust  and  Loan  Company  of  Upper  Can- 
ada which  "  owes  much  of  its  success  to  his  exertions. "  Later, 
he  became  president  of  the  Manufacturers'  Life  Assurance 
Company. 

Macdonald's  own  evidence  showed  that  he  had  personally 
bargained  in  the  charter  traffic  with  Sir  Hugh  Allan,  and 
that  he  had  received  funds  from  Allan  for  use  in  election 
purposes. 

Premier  Macdonald  testified  that  the  Government  had  asked 
Donald  Smith  to  be  a  member  of  the  Canada  Pacific  Board; 
Smith  was  "  the  representative  man  of  the  Hudson's  Bay 
Company  in  Canada  "  and  the  "  Government  thought  it  would 
be  a  great  advantage  to  get  the  assistance  and  influence  of 
that  powerful  corporation  in  England,  if  the  Company  had  to 
go  to  that  market  to  borrow.  .  .  ."  But  when  the  Govern- 
ment, Premier  Macdonald's  testimony  continued,  came  to  the 
conclusion  to  exclude  members  of  Parliament,  Smith  was  ex- 
cluded, "  and  upon  Smith's  recommendation,  Mr.  McDermott, 

29  Report  of  the  Royal  Commission,  Pacific  Railway,  etc.,  1873.  En- 
closure No.  5,  Appendix,  pp.  85-90.  Sir  George  E.  Cartier  died  be- 
fore this  investigation  was  held;  therefore  his  side  of  the  story  can- 
not be  given. 


CONTEST   FOR   THE   PACIFIC   RAILWAY  237 

a  wealthy  merchant  in  Winnipeg,  was  appointed  in  Smith's 
place."  30 

Prime  Minister  Macdonald's  explanation  was  not  well  re- 
ceived. The  testimony  showed  that  the  construction  work 
was  to  be  undertaken  by  a  company  composed  of  the  identical 
men  promoting  the  railway  project,  and  thus  from  the  profits 
of  the  construction  work  were  to  recoup  themselves  for  their 
previous  outlays.31 

Allan  Admits  Expending  $350,000 

Summoned  as  a  witness  by  the  Royal  Commission,  Allan 
himself  produced  the  letter  in  which  Sir  George  E.  Cartier 
had  asked  him  for  various  sums  of  money  for  use  by  the  Gov- 
ernment in  the  pending  elections.  (We  have  already  given 
the  text  of  this  letter.)  "As  the  letter  now  appears,"  Allan 
testified,  "  the  memorandum  is  for  $i  10,000,  but  at  the  time 
it  was  written  the  first  three  items  amounting  to  $60,000  only 
were  mentioned.  Sir  George  said,  however,  that  they  could 
talk  of  that  afterwards.  Accordingly,  I  paid  over  the  first 
three  sums  of  money  to  the  gentlemen  indicated.  Afterwards 
Sir  George  requested  me  to  send  a  further  amount  to  Sir 
John  A.  Macdonald  of  $10,000,  and  $10,000  to  Mr.  Langevin 
and  $30,000  to  the  Central  Committee  of  Elections,  and  the 
three  sums  last  mentioned  in  the  memorandum  were  then 
added  to  it  by  Sir  George." 

Later,  more  demands  upon  Allan  were  made,  and  soon 
Allan  found  that  he  had  contributed  $162,600,  of  which  $85,- 
ooo  went  to  Sir  George  E.  Cartier's  Committee,  $45,000  to 

5QIbid.,  p.  115  of  Testimony. 

31  See  Ibid.,  Exhibit  K.  pp.  210-211  of  Report.  The  construction 
contract  was  to  be  let  to  the  Canada  Land  and  Improvement  Company. 
This  contract  was  signed  by  Sir  Hugh  Allan,  Donald  A.  Smith, 
George  W.  McMullen,  Jay  Cooke  and  Company,  Thomas  A.  Scott 
and  others.  Of  the  total  capital  of  $5,725,000,  Allan,  Smith  and  Mc- 
Mullen subscribed  $4,500,000. 


238  CONTEST   FOR   THE   PACIFIC   RAILWAY 

Sir  John  A.  Macdonald's  election  expenses  in  Ontario,  and 
$32,600  toward  Langevin's  electoral  expenses  in  Quebec. 

"  I  also  find,"  Allan  went  on,  "  for  the  assistance  of  other 
friends  of  my  own  in  connection  with  the  elections,  between 
$16,000  and  $17,000. 

"  These  sums,  with  the  preliminary  expenses  on  the  Pacific 
and  various  railroads  in  which  I  was  engaged,  more  or  less 
directly  connected  with  the  Pacific  enterprises,  made  up  the 
amount  of  my  advances  to  about  $350,000."  32 

Sir  Hugh  Allan  also  testified  that  Sir  Francis  Hincks, 
Dominion  Minister  of  Finance,  asked  him  to  get  his  (Hincks') 
son  in  the  Montreal  Warehousing  Company's  offices;  of  this 
Company,  as  we  have  seen,  Allan  was  president.  Hincks'  son 
failed  to  get  the  appointment.  Allan  further  testified  that 
"  my  property  invested  in  various  ways  connected  with  the 
country  in  business  of  all  kinds,  amounts  to  about  $6,000,- 
ooo,"  33  an  amount  which,  compared  to  the  present  purchas- 
ing power  of  money,  equals  perhaps  $60,000,000.  Allan's  in- 
come was  reported  at  $500,000  to  $600,000  a  year;  expressed 
in  terms  of  the  then  greater  purchasing  power  of  money,  it 
was  an  annual  income  that  today  would  perhaps  be  equal  to 
$5,000,000  or  $6,000,000. 

The  Large  Bank  Graft 

It  may  be  added  that  railway  charter  trafficking  was  not 
the  only  kind  carried  on;  the  banks,  also,  did  not  lack  their 
share  of  "  Government  encouragement."  A.  T.  Gait,  Domin- 
ion Finance  Minister  in  1867,  was  a  big  bank  stockholder; 
Sir  John  Rose  who  succeeded  him  was  a  partner  in  a  large 
international  banking  firm,  and  Sir  Francis  Hincks,  who  suc- 

32  Report  of  the  Royal  Commission,  Pacific  Railway,  etc.,   1873,  p. 
137- 

33  Ibid.,  p.  143. 


CONTEST   FOR   THE   PACIFIC    RAILWAY  239 

ceeded  Rose  as  Minister  of  Finance,3*  was  not  only  a  bank 
stockholder  and  director,  but  became  president  of  the  Con- 
solidated Bank  of  Montreal  which  failed  so  disastrously  in 
1879  with  an  assortment  of  $1,420,000  in  bad  and  doubtful 
debts.35 

It  appeared,  according  to  statements  made  in  the  Dominion 
Parliament  by  Mr.  (later  Sir)  Charles  Tupper,  Sir  Richard 
Cartwright  and  Mr.  Blake  that  in  the  years  immediately  pre- 
ceding 1873, tne  Bank  of  Ontario  received  an  average  of  $360,- 
ooo  a  year  of  public  Government  money  deposited  without  hav- 
ing to  pay  interest,  thus  giving  that  bank  a  present  of  $30,000 
a  year;  that  $1,100,000  was  deposited  in  the  Montreal  City  and 
District  Savings  Bank  of  which  Finance  Minister  Hincks  was 
a  Director  or  President,  and  that  of  this  $1,100,000  of  Govern- 
ment or  public  deposits,  only  $400,000  drew  interest.  Mr. 
Blake  said  that  these  deposits  of  the  people's  money  "  were 
spread  over  thirty-seven  different  institutions,  and  of  course, 
members  of  Parliament  were  likely  to  be  shareholders  in  the 
larger  and  more  stable  institutions."  Sir  Richard  Cartwright 
(Minister  of  Finance  1873-1878),  stated  that  the  amount  of 
Government  money  on  deposit  on  December  31,  1871,  was 

34  There  were  four  successive  Ministers  of  Finance  under  the  Mac- 
donald  Administration  from  1867  to  1873.     Hincks  occupied  that  post 
from   October,    1869,   to   February,    1873,   and   was   succeeded   by   Sir 
Samuel  Leonard  Tilley. 

35  This  bank  was  the  result  of  the  merger  of  two  banks  —  a  Mon- 
treal and  a  Toronto  bank.     It  crashed  in  1879  owing  fully  $3,000,000. 
Just  before  the   failure  Sir  Francis  Hincks  at  a  stormy  meeting  of 
the    stockholders   tried    to    reassure    them.    "  This    bank,"    then    com- 
mented the  Monetary  Times,  "  has  the  advantage  of  being  governed 
by  a  President  whose  qualifications  are  never  better  displayed  than  in 
making  a  speech  under  difficult  circumstances.     '  Many  a  time  and  oft ' 
Sir  Francis  Hincks  has  confronted  opposing  forces  in  Parliament  and 
he  has  a  perfect  mastery  of  the  art  of  putting  things  in  such  a  light  as 
to  disarm  opposition." — Monetary  Times,, June  13,  1879,  p.  1534.    Sir 
Francis  Hincks  was  convicted  on  the  technical  charge  of  being  a  party 
to  the  making  of   false  returns  to  the  Government,  but  the  general 
supposition  was  that  he  had  been  used  by  parties  who  managed  to 
escape  the  consequences. 


24°  CONTEST   FOR   THE   PACIFIC   RAILWAY 

nearly  $8,000,000,  of  which  $4,300,000  bore  no  interest;  the 
Bank  of  Montreal,  it  seems,  was  one  of  the  banks  profiting 
heavily.36 

Donald  A.  Smith  Turns  Against  Macdonald 

The  railway  disclosures  made  it  evident  that  Premier  Mac- 
donald had  to  retire,  but  if  he  had  been  able  to  obtain  a 
favorable  vote  from  Parliament  itself,  it  was  possible  that 
Governor-General  Lord  Dufferin  might  have  allowed  him  to 
choose  his  successor.  "  Finally/'  wrote  Sir  Richard  Cart- 
wright,  "  after  some  hesitation  and  after  the  debate  had  gone 
on  for  many  days,  Mr.  Laird  .  .  .  declared  his  intention  of 
voting  with  the  Opposition.  This,  which  was  followed  by  a 
similar  pronouncement  from  Mr.  Donald  Smith  (now  Lord 
Strathcona),  put  an  end  to  all  doubt  as  to  how  the  vote  would 
go,  and  Sir  John,  without  more  ado,  tendered  his  resigna- 
tion." 37  Out,  therefore,  went  Prime  Minister  Sir  John  A. 
Macdonald  and  the  whole  of  his  Government,  and  in  came  a 
Ministry  headed  by  Alexander  Mackenzie. 

Mr.  Smith's  Change  of  Front 

Why,  however,  did  Mr.  Donald  A.  Smith  change  so  sud- 
denly from  being  an  ardent  supporter  of  Macdonald's  admin- 
istration to  an  opponent  whose  decisive  vote  at  this  critical 
juncture,  added  to  a  few  other  adverse  votes,  caused  the 
resignation  of  Macdonald's  Ministry?  We  have  seen  from 
Macdonald's  own  testimony  how  the  Prime  Minister  recom- 
mended Mr.  Smith  for  a  place  on  the  Board  of  Directors  of 
the  Canada  Pacific  Railway. 

This  was,  indeed,  a  most  vital  question.     It  was  but  a  few 

36  Debates  in  the  House  of  Commons,  Third  Session,  Third  Parlia- 
ment, pp.  919-923. 

37  Reminiscences,  p.  118. 


CONTEST   FOR   THE   PACIFIC   RAILWAY  24! 

years  later  that  Sir  Charles  Tupper,  in  the  House  of  Com- 
mons, was  so  uncharitable  as  to  accuse  Mr.  Smith  in  categorical 
fashion  of  certain  distinct  and  supposedly  palpable  motives  in 
thus  turning  against  his  political  chief  and  patron,  Macdon- 
ald.  "  Mr.  Smith  was  a  representative  of  the  Hudson's  Bay 
Company,"  announced  Tupper  [who  had,  in  1872  and  1873 
occupied  the  posts  of  Minister  of  Inland  Revenue  and  Min- 
ister of  Customs  under  Macdonald],  and  he  [Smith]  had 
been  pressing  a  claim  on  his  right  honorable  friend  [Mac- 
donald] for  public  money;  Sir  John  had  held  back,  and  Mr.' 
Smith  came  to  the  conclusion  that  it  would  be  just  as  well 
to  jump  the  fence  if  there  was  to  be  a  change  of  Government. 
But  Mr.  Smith  was  a  canny  man;  he  held  back  and  sat  on  the 
fence  and  watched  the  course,  certainly  not  in  the  interests 
of  his  country,  because  he  did  not  want  to  jump  too  soon 
and  find  he  had  jumped  into  a  ditch.  But  when  he  came  to 
the  conclusion  that'  the  Government  was  going  out,  he  made 
the  bolt,  and  I  have  no  doubt  that  he  has  had  a  great  deal 
of  reason  since  for  congratulating  himself  on  having  jumped 
as  he  did."  38 

An  Uproar  in  Parliament 

In  the  violent,  extremely  unparliamentary  scene  that  oc- 
curred next  day  —  a  scene  famous  in  the  annals  of  the  Do- 
minion Parliament  —  various  members  more  than  intimated 
that  after  the  honorable  Mr.  Donald  A.  Smith's  sudden  flop, 
and  after  the  new  Government  took  office,  extensive  contracts 
and  corporate  powers  and  proprietary  possessions  somehow 
came  into  the  ownership  of  Mr.  Smith  and  associates.  When 
Smith  said  that  he  had  received  or  desired  no  more  from 
Mackenzie's  than  from  Macdonald's  Government,  Tupper 
asked  him  point  blank  whether  he  (Smith)  had  not,  in  1873, 

38  Debates  in  the  House  of  Commons,  Dom.  Part.,  1878,  Vol.  V,  p. 
2560. 


242  CONTEST   FOR   THE   PACIFIC   RAILWAY 

telegraphed  to  Ottawa  that  he  would  be  there  to  support  the 
Government,  and  that  he  then  knew  all  about  the  Canadian  Pa- 
cific Railroad  affair.  Smith  denied  that  he  sent  the  telegram. 

Whereupon  there  was  a  wild  uproar.  Mr.  Smith  charged 
Sir  John  A.  Macdonald  with  having  made  certain  statements 
in  a  private  conversation.  Macdonald  accused  Smith  of  stat- 
ing a  falsehood.  Mr.  Rochester  got  up  and  asked  Smith  "  how 
much  the  other  side  offered  him  ?  " 

At  this,  members  suddenly  became  bereft  of  decorum,  and 
shouted  and  gesticulated  excitedly.  Tupper  called  Smith's 
conduct  a  cowardly  abuse,  and  charged  him  with  detailing 
"  what  he  knows  to  be  falsehood."  Excitement  now  multi- 
plied ;  some  members  shouted  "  Order ! " ;  others  exploded 
into  asking  running  questions.  Tupper  asserted  that  Smith 
had  begged  him  to  implore  the  leader  of  the  Government  to 
make  him  (Smith)  a  member  of  the  Privy  Council  of  Canada 
and  was  refused,  which  allegation  Smith  denied.  Here  there 
was  more  disorder,  and  still  more  so  when  Tupper  repeatedly 
called  Smith  a  coward,  a  "  Mean,  treacherous  coward !  " 39 
A  message  from  the  Governor-General  came  in  at  that  mo- 
ment, and  had  the  effect  of  diverting  the  diversion.  Accord- 
ing to  Sir  Richard  Cartwright,  nothing  but  the  presence  of  the 
Sergeant-at-Arms  and  "  a  few  stalwart  keepers  of  the  peace 
.  .  .  prevented  an  absolute  physical  collision  between  the  par- 
ties." Cartwright  described  Sir  John  Macdonald  and  Dr. 
Tupper  as  "  absolutely  beside  themselves  for  the  time  being, 
while  Mr.  Smith  was  collected  and  composed."  40  Cartwright, 
it  may  be  said,  held  a  somewhat  prejudiced  and  altogether 
opposing  partisan  view  of  Macdonald. 

80  Ibid.,  p.  2564.  The  language  here  given  is  exactly  that  reported  in 
Hansard. 

40  Reminiscences,  p.  187.  The  scene  as  reported  in  Hansard,  Cart- 
wright further  wrote,  "but  faintly  represents  what  actually  took  place. 
The  shouts  and  cries  were  so  loud  that  but  a  part  of  what  passed  was 
heard  and  taken  down  by  the  reporters.  .  .  ." — Ibid.,  p.  388. 


CONTEST   FOR  THE  PACIFIC  RAILWAY  243 

Of  the  charges  made  during  this  particular  session  we  shall 
have  more  in  detail  to  say  in  the  next  chapter.  Whatever 
may  have  been  the  merits  of  the  controversy  as  to  why  Donald 
A.  Smith  turned  front,  the  fact  remained  that  he  and  certain 
others  chief  of  whom  was  George  Stephen,  future  Lord  Mount 
Stephen,  became  railway  and  land  magnates  of  the  first  order 
under  Mackenzie's  Government,  and  during  that  period,  by 
a  series  of  laws,  contracts  and  acquisitions,  prepared  the  way 
for  their  subsequent  construction,  acquirement  and  ownership 
of  the  Canadian  Pacific  Railroad. 


Sir  Hugh  Allan  Gets  Nothing 

All  of  Sir  Hugh  Allan's  bargainings  and  schemings  were 
finally  in  vain ;  the  charter  granted  to  him  and  associates  never 
received  the  sanction  of  Parliament  and  never  became  of 
effect.  But  seven  years  later  —  in  1880  —  a  company  headed 
by  George  Stephen,  with  Donald  A.  Smith  interested  in  the 
background,  put  through  the  actual  measures  practically  giv- 
ing them  the  Canadian  Pacific  Railway  virtually  free  of  cost 
and  with  a  land  grant  of  25,000,000  acres. 


CHAPTER  XIII 
ERA  OF  RAILWAY  MAGNATES 

After  the  disclosures  of  the  methods  used  to  get  the  Cana- 
dian Pacific  Railway  charter,  money  subsidies  and  land  grants, 
an  agitation  set  in  to  have  the  Government  build  the  line,  and 
parts  of  it  were  begun  under  Government  supervision.  But 
as  shown  by  a  Government  advertisement  in  1876  calling  for 
proposals  from  private  companies  for  the  construction  of  the 
railway,  the  scheme  of  Government  construction,  operation 
and  ownership  was  not  held  too  seriously. 

By  1878  only  a  little  more  than  100  miles  of  track  were  laid, 
and  this  line  was  a  detached,  isolated  section  running  from 
Thunder  Bay  to  Tetu  Lake.  There  was  also  the  Pembina 
branch  over  which  the  trains  of  the  St.  Paul  and  Pacific  Rail- 
way entered  Emerson;  as  to  both  the  Pembina  branch  and 
the  St.  Paul  and  Pacific  line  we  shall  give  further  details  in 
this  chapter.  The  great  project  of  a  transcontinental  railway 
system  still  remained  a  project.  With  the  recent  revelations 
fresh  and  sharp  in  the  public  mind,  the  subject  was  a  sensi- 
tive one  to  the  politicians  both  in  and  out  of  power. 

The  Intercolonial  Railway 

In  the  eastern  part  of  Canada  the  construction  of  a  railway 
to  the  seacoast  at  Halifax  had  also  been  provided  for  in  the 
Confederation  agreement,  but  this  railway  was  early  made  a 
publicly-owned  and  publicly-operated  system. 

Some  portions  had  been  purchased  by  the  New  Brunswick 

244 


ERA   OF   RAILWAY   MAGNATES  245 

Government  from  private  contractors  and  extended  under 
public  control ;  other  parts  had  been  independently  constructed 
by  the  Nova  Scotia  Government.  After  the  formation  of  the 
Dominion  of  Canada  in  1867,  the  Dominion  Government  took 
control  of  these  railways,  and  constructed  connections  and 
extensions.  On  November  9,  1872,  all  of  these  Government 
railways  were  consolidated  under  the  name  of  the  Intercolonial 
Railway.  These  formerly  separate  railways  were  the  Nova 
Scotia  Railway,  145  miles;  the  Intercolonial  Railway,  118 
miles;  and  the  European  and  North  American  Railway,  108 
miles.  The  Government  railway  thus  now  comprised  375 
miles  running  from  Halifax  to  St.  John  with  some  branches. 
The  next  move  was  to  connect  the  Intercolonial  Railway 
with  the  Province  of  Quebec.  In  1874  the  Government  had 
a  line  of  86  miles  constructed  between  Riviere  du  Loup  and 
St.  Flavie.  Another  section  of  290  miles  between  Ste.  Flavie 
and  Moncton  was  finished  by  1876.  The  line  of  the  Inter- 
colonial Railway  now  extended  from  Riviere  du  Loup  to 
Halifax.  From  the  Grand  Trunk  Railway  Company  a  line 
of  126  miles  running  from  Riviere  du  Loup  to  Hadlow  was 
bought  in  1879,  an<^  with  the  subsequent  acquirement  or  con- 
struction of  various  railway  sections  and  by  securing  running 
rights  over  other  sections,  the  Intercolonial  Railway  system 
extended  from  Montreal  to  Halifax,  and  to  St.  John  and  the 
Sydneys  in  Nova  Scotia. 

Conflicting  Principles 

While,  therefore,  in  one  great  stretch  of  Canada  the  prin- 
ciple of  public  railway  ownership  was  definitely  established, 
the  construction  and  ownership  of  railways  in  other  great 
sections  were  turned  over  to  individual  capitalists  who  were 
allowed  vast  gratuities  of  money  subsidies  and  land  grants, 
and  in  other  ways  were  given  the  fullest  license  to  accumu- 


246  ERA   OF   RAILWAY   MAGNATES 

late  enormous  private  fortunes  and  corporate  power  speed- 
ily. 

In  the  United  States  such  an  inconsistent,  anomalous  pol- 
icy was  unknown ;  there  all  of  the  railway  charters  were  given 
to  private  companies  and  all  of  the  railways  were  privately 
owned  and  operated;  private  ownership  and  operation  and 
Government  ownership  and  operation  did  not  exist  side  by 
side  as  they  did  in  Canada. 

If,  however,  the  Canadian  Pacific  Railway  project,  as  orig- 
inally planned,  was  allowed  practically  to  lie  dormant  for  the 
time,  other  projects  were  consummated.  Although  these  proj- 
ects and  transactions  were  small  compared  to  the  Pacific  rail- 
way scheme,  their  outgrowing  powers  and  the  profits  derived 
were  of  much  ultimate  consequence.  The  chief  beneficiaries 
of  these  transactions  were  some  of  the  very  men  who  developed 
into  great  railway,  land-owning,  bank  and  mine  magnates,  men 
who  today  stand  out  illustriously  as  among  the  most  exemplary 
and  foremost  multimillionaire  capitalists  of  Canada  and  of  the 
United  States. 

Red  River  Line  Scandal 

One  of  these  transactions  was  a  certain  contract  given  by 
the  Canadian  Government  to  the  Red  River  Transportation 
Company.  This  corporation  was  an  outgrowth  of  the  activ- 
ities of  Donald  A.  Smith,  under  whom,  as  Chief  Officer  of 
the  Hudson's  Bay  Company,  the  use  of  steamers  upon  the 
lakes  and  rivers  of  the  North  West  Territories  was  first 
projected  in  1871. 

The  circumstances  of  this  contract  and  of  another  contract 
led'  to  some  extremely  vigorous  talk  in  the  Dominion  House 
of  Commons  in  1877  an^  l&7%-  Sir  Charles  Tupper,  strong 
in  his  aptitude  for  delving  into  financial  transactions,  had  crit- 
ical remarks  to  make  of  a  certain  payment  by  the  Dominion 
Government  of  $223,884  to  the  Red  River  Transportation 


ERA   OF   RAILWAY   MAGNATES  247 

Company  for  conveying  rails  from  Duluth  to  St.  Boniface, 
near  Fort  Garry.  The  contract,  he  charged,  had  not  been 
given  by  public  tender,  and  the  rates  charged  were  enormous. 
A  few  days  later  —  on  April  24,  1877  —  Tupper  said  that  Mr. 
John  Christian  Schultz,  M.  P.,  who  represented  Manitoba,  had 
informed  him  that  Donald  A.  Smith  held  a  third  interest  in 
the  Red  River  Transportation  Company.1  It  may  here  be  re- 
peated that  Schultz  later  became  Lieutenant-Governor  of  Man- 
itoba. 

Schultz  arose  to  amplify  Tupper's  comments.  He  read, 
certain  correspondence  of  the  Red  River  Transportation  Com- 
pany (of  which  N.  W.  Kittson  was  General  Manager),  and 
analyzing  the  payments  by  the  Government,  asserted  that  they 
were  exorbitant.  The  fact  that  the  Government  had  paid 
some  hundreds  of  thousands  of  dollars  to  this  line,  he  said, 
made  easy  the  explanation  why  that  Company  could  divide 
80  per  cent,  on  its  stock  among  its  shareholders. 

Charges  as  to  Its  Contract 

"  But  how  came  about  this  enormous  waste  of  the  public 
money  ? "  Schultz  inquired.  "  How  was  it  that,  when  an 
opposition  steamboat  line  was  known  to  be  in  operation  on 
the  Red  River,  tenders  were  not  asked  for?  And  why  was  it 
that  the  enormous  price  .  .  .  originally  promised  should  have 
been  extended  .  .  .  ? 

"  The  honorable  member  for  Selkirk  [Donald  A.  Smith] 
said  he  had  nothing  to  do  with  the  Kittson  line;  but  certain 
it  was  that  rumor  gave  him  the  credit  of  owning  indirectly 
a  large  quantity  of  its  stock.  Certain  it  was  that  Mr.  Kittson 
merged  the  agency  of  the  Hudson's  Bay  Company  into  the 
management  of  the  Kittson  line,  which  was  commenced  mainly 

1  Debates  in  the  House  of  Commons,  Dom.  Pad.,  1877,  Vol.  Ill,  pp. 
1689  and  1772. 


248  ERA   OF   RAILWAY   MAGNATES 

with  the  boats  of  the  Hudson's  Bay  Company.  Of  course, 
it  was  not  at  all  likely  that  the  name  of  the  honorable  member 
for  Selkirk  [Smith]  appeared  on  the  stock  books  of  the  Kitt- 
son  Company,  for  that  would  vitiate  the  right  of  the  company 
receiving  bonded  goods;  yet  there  were  other  ways  of  hold- 
ing stock  than  the  open  one  of  having  names  in  full  in  the 
stock  books  of  the  company. 

"  If,"  Schultz  pertinently  asked,  "  no  one  deeply  interested 
in  the  success  of  this  line  vouched  for  Mr.  J.  J.  Hill,  who  so 
deftly  manipulated  the  contract,  how  was  it  that  the  Premier 
chose  to  jump  at  the  offer  of  a  stray  American,  who  came 
along  with  his  offer  to  carry  rails  at  twice  the  price  the  trans- 
portation was  worth,  and  at  least  one-third  more  than  it  would 
have  cost  the  Government  had  tenders  been  asked  for  from 
the  rival  line  on  the  Red  River  and  others  ?  " 

Here  it  may  be  parenthetically  remarked  that  this  charge 
made  by  Schultz  was  subsequently  confirmed  by  the  testimony 
before  the  Royal  Commission  on  the  Canadian  Pacific  Rail- 
way. 

Toussaint  Trudeau,  Deputy  Minister  of  Railways  and 
Canals,  testified  before  that  Commission  that  on  April  16, 
1875,  Fuller  and  Milne,  steamboat  competitors  of  the  Red 
River  Transportation  Company,  had  previously  made  a  much 
better  offer  for  the  transportation  of  rails  than  had  Kitt- 
son,  but  that  James  J.  Hill  had  appeared  in  Ottawa,  and  after 
an  interview  with  the  Minister,  the  contract  had  been  hur- 
riedly given  (without  competition  being  invited)  to  Kittson. 
In  its  "  Conclusions,"  the  Royal  Commission  on  the  Canadian 
Pacific  Railway  reported  that  the  rates  offered  by  Fuller  and 
Milne  would,  had  their  tender  been  accepted,  have  meant  a 
very  considering  saving  to  the  Government;  that  the  direct 
difference  between  the  whole  quantity  at  Kittson's  rates  and 
those  of  Fuller  and  Milne  was  about  $44,000  American  cur- 
rency ;  and  that  even  although  it  was  getting  exorbitant  prices, 


ERA   OF   RAILWAY   MAGNATES  249 

the  Red  River  Transportation  Company  did  not  fully  carry 
out  its  contract.2 

Mr.  Schultz's  Statements 

We  shall  now  return  to  the  debate  in  the  House  of  Com- 
mons, on  April  24,  1877.  Concluding  his  remarks  as  to  Red 
River  Transportation  Company  transaction,  Schultz  said  that 
he  firmly  believed  that  Donald  A.  Smith  was  precisely  what 
Tupper  had  stated  —  a  participator  in  the  profits  of  the  Red 
River  Transportation  Company.  When  the  Speaker  called 
Schultz  to  order  saying  that  Donald  A.  Smith  had  positively 
denied  being  a  shareholder  in  the  Company,  or  participating 
in  its  profits,  Schultz  reiterated  his  statement,  saying  that  he 
based  his  belief  mainly  on  public  documents,  and  especially 
on  letters  that  he  read.  Schultz  declared  that  J.  J.  Hill  had 
had  a  very  strong  backing  in  his  dealings  with  the  Govern- 
ment.3 

The  J.  J.  Hill  here  referred  to  was  James  J.  Hill,  that  great 
present-day  railway  magnate  of  the  United  States.  A  Cana- 
dian, he  had  gone  to  Minnesota  to  seek  his  fortune;  and  of 
some  of  his  methods  in  accumulating  his  enormous  wealth, 
we  shall  have  more  to  say  presently. 

The  matter  of  the  Red  River  Transportation  Company  did 
not  end  with  this  day's  enlivening  proceedings.  It  came  up 
again  in  the  House  of  Commons  on  April  4,  1878,  when  in  the 
course  of  a  vitriolic  debate,  Schultz  resumed  his  heated  attack 
upon  Donald  A.  Smith  and  his  methods.  After  Smith  had 
given  a  long  defense  of  the  Red  River  Transportation  Com- 
pany, Schultz  described  at  length  what  he  termed  its  greed, 
and  told  how  settlers  going  to  Manitoba  were  "  huddled  like 
sheep  and  treated  like  hogs  on  the  lower  decks  of  those  very 

2  See   Report   of   the   Royal   Commission   on   the   Canadian   Pacific 
Railway,  Vol.  II,  p.  969,  and  Vol.  Ill,  pp.  276-284. 

3  Debates  in  the  House  of  Commons,  etc.,  1877,  Vol.  Ill,  pp.  1800- 
1801. 


250  ERA   OF   RAILWAY    MAGNATES 

steamers/'     It  was  a  notorious  monopoly,  he  said,  and  paid 
big  dividends;  its  freight  charges  were  a  gross  imposition.* 

But  was  Donald  A.  Smith  connected  with  the  Red  River 
Transportation  Company  which  profited  so  highly  from  Gov- 
ernment contracts?  One  of  his  eulogists,  Alexander  Begg, 
wrote  assertively  that  "  although  his  name  does  not  appear, 
he  was  a  powerful  factor  in  building  up  the  steamboat  facili- 
ties on  the  Red  River.  .  .  ."  5 

St.  Paul  and  Pacific  Railway 

There  was,  however,  another  transaction  which  caused  a 
much  greater  stir  in  and  out  of  Parliament.  This  was  the 
acquisition  by  Donald  A.  Smith  and  associates  of  the  St.  Paul 
and  Pacific  Railway,  and  the  later  leasing  to  it  by  the  Canadian 
Government  of  the  Pembina  branch  of  the  projected  Canadian 
Pacific  Railway. 

The  early  history  of  the  St.  Paul  and  Pacific  Railway  was 
full  of  scandals. 

Its  original  promoter  was  Russell  Sage,  a  Troy,  New 
York,  grocery  merchant.  After  he  and  his  partners  had  suc- 
cessfully concocted  a  certain  swindle,  Sage  as  successfully 
cheated  his  own  partners  out  of  the  proceeds  of  that  swindle.6 

The  City  of  Troy  had  built  a  railroad  called  the  Troy  and 
Schenectady  Railway.  Sage  was  a  leading  member  of  the  Troy 
Common  Council  and  one  of  Troy's  directors  of  that  railway. 
He  manipulated  matters  so  that  the  City  of  Troy  was  per- 
suaded into  selling  the  road,  and  it  was  his  own  vote  that  de- 
cided it.  Sold  for  $206,000,  the  Troy  and  Schenectady  Rail- 
way was  promptly  bought  in  by  a  syndicate,  headed  by  Sage, 

*  Ibid.,  p.  1685. 

5  History  of  the  Northwest,  Vol.  Ill,  p.  100. 

6  The  specific  details  are  related  in  the  History  of  the  Great  Ameri- 
can Fortunes,  Vol.  Ill,  pp.  14-16,  citing  the  records  of  the  Supreme 
Court  of  the  United  States. 


ERA   OF   RAILWAY   MAGNATES  25! 

paying  only  $50,000  in  cash.  It  was  subsequently  sold  by 
Sage  and  partners  for  $900,000  to  the  New  York  Central 
Railroad  syndicate.  Sage  then  had  himself  elected  and  re- 
elected  to  Congress  in  1853  and  1854,  and  was  busy  during 
the  years  when  Acts  directly  or  indirectly  giving  immense 
land  grants  to  railways  were  lobbied  or  bribed  through  that 
body.7 

Its  Original  Plundering  by  Sage 

One  of  these  railways  was  the  Minnesota  and  Pacific  Rail- 
way. Robbed  into  insolvency  by  the  plundering  of  construc- 
tion companies  composed  of  the  identical  men  who  promoted 
the  railway,  it  was  foreclosed,  and  was  bought  in  by  the  very 
men  who  had  looted  it. 

In  order  to  cover  their  lootings  by  legal  artifices,  and  thus 
prevent  defrauded  creditors  from  recovering,  they  caused  an 
Act  to  be  passed  by  the  Minnesota  Legislature  reorganizing 
the  railroad  into  two  divisions,  one  called  the  St.  Paul  and 
Pacific,  and  the  other  the  First  Division  of  the  St.  Paul  and 
Pacific  Railway  Company.  At  the  head  of  the  group  con- 
trolling both  of  these  apparently  separate  roads  was  Russell 
Sage.  In  exchange  for  mortgages  on  the  line  and  on  its  land 
grant,  Dutch  capitalists  were  wheedled  into  advancing  $13,- 
380,000  for  the  completion  of  the  line,  and  thus  avert  the  for- 
feiture of  its  land  grant,  as  threatened  by  the  Minnesota  Leg- 
islature. Great  parts  of  the  sums  advanced  by  capitalists  in 
Holland  were  fraudulently  diverted  by  the  promoters,8  and 
the  entire  road  in  1875  went  into  bankruptcy.9 

7  See  full  details  in  Chapters  I  and  II,  Vol.  Ill  of  the  History  of  the 
Great  American  Fortunes,  giving  the  facts  from  official  documents. 

8  These  fraudulent  methods  are  described  in  Dillon's   (U.  S.)    Cir- 
cuit Court  Reports,  Vol.  V,  pp.  451-459  and  519-536  in  which  Judge 
Dillon  states  the   facts. 

9  This  necessarily  is  merely  an  outline  of  the  looting  of  this  railway 
by  Sage  and  associates.     The  full  narrative,  citing  from  the  facts  as 
set  forth  in  the  United  States  court  records,  is  given  in  Chapter  II, 
Vol.  Ill  of  the  History  of  the  Great  American  Fortunes. 


252  ERM  OH  RSltWAY  MAGNATES 


Farley  Is  Appointed  Receiver 

Judge  Dillon  in  the  United  States  Circuit  Court  appointed 
one  Jesse  P.  Farley  receiver.  James  J.  Hill  now  stepped  in. 
He  discerned  the  opportunity  of  getting  for  almost  nothing 
at  a  forced  sale  a  railway  of  500  miles  with  a  land  grant  of 
more  than  2,500,000  acres. 

According  to  Farley's  repeated  statements  in  subsequent 
Court  proceedings,  Hill  and  Norman  W.  Kittson  entered  into 
a  conspiracy  with  him  (Farley)  to  betray  the  United  States 
Courts,  and  that  at  the  same  time  John  S.  Kennedy,  of  New 
York  City,  the  representative  of  the  Dutch  bondholders,  con- 
spired with  him  to  betray  those  bond-holders.  Hill  denied 
these  allegations,  but  Farley  asserted  and  reasserted  them  in 
many  court  proceedings.10  Farley  was  an  ignorant  man  who 
had  seen  some  railroad  experience  in  Iowa;  that  he  was  rec- 
ommended to  the  Court  as  receiver  by  Kennedy  is  definitely 
stated  in  the  Court  decisions.11 

The  Receiver's  Collusion 

If  Farley's  sworn  statements  may  be  believed,  he  was  to 
mismanage  the  affairs  of  the  railway  so  that  the  price  of  the 
bonds  would  be  reduced,  and  he  was  to  inform  Hill  and  Kitt- 
son of  every  move  that  he  made.  At  the  right  time  Hill  and 
Kittson  were  to  come  forward,  and  get  control  of  the  railway. 
Neither  Hill  nor  Kittson  had  the  necessary  money  to  do  this, 
but  according  to  Farley  they  were  to  give  a  two-fifths  or  40- 
per  cent,  interest  to  anyone  supplying  the  funds.  Farley 

10  See  Farley  vs.  St.  Paul,  Minneapolis  and  Manitoba  Railroad  Com- 
pany, Federal  Reporter,  Vol.  XIV,  pp.  114-118;  United  States  Re- 
ports, Vol.  CXX,  pp.  303-318;  Farley  vs.  Hill,  Federal  Reporter,  Vol. 
XXXIX,  pp.  531-532;  Farley  vs.  Norman  W.  Kittson  et.  al.,  Minne- 
sota Reports,  Vol.  XXVII,  pp.  102-107. 

"  Federal  Reporter,  Vol.  XXIX,  p.  516. 


ERA  OF   RAILWAY   MAGNATES  253 

asserted  that  this  agreement  further  provided  that  a  three- 
fifths  or  6o-per  cent,  interest  was  to  be  reserved  for  himself 
and  for  Hill  and  Kittson, —  one-fifth  for  each  of  the  trio.12 
In  view  of  threatened  forfeiture  of  the  St.  Paul  and  Pacific 
Railway's  franchises  and  land  grants,  the  urgent,  immediate 
consideration  was  to  construct  the  extensions  at  once.  But 
from  where  were  the  necessary  funds  to  come? 

Enter  Donald  A.  Smith  and  George  Stephen 

This  contingency  was  soon  provided  for.  Kittson  brought 
in  two  fellow  Canadians.  One  was  Donald  A.  Smith,  con- 
nected like  himself  with  the  Hudson's  Bay  Company;  the 
other  was  George  Stephen,  President  of  the  Bank  of  Montreal. 

Hill  and  his  associates  now  bought  in  the  whole  of  the  $28,- 
000,000  of  the  St.  Paul  and  Pacific  Railway  bonds  at  an  ab- 
surdly low  price.  In  some  cases  only  three  per  cent,  of  their 
value  was  paid;  in  other  cases  from  13*4  to  75  per  cent,  of 
their  par  value.  Hill  and  his  partners,  however,  were  not 
required  to  pay  in  immediate  cash.  The  bonds  were  chiefly 
acquired  on  the  understanding  that  they  were  not  to  be  paid 
for  until  the  railway  was  finally  reorganized. 

The  funds  in  hand  were  spent  in  a  hasty  effort  to  construct 
the  extensions,  and  so  forestall  the  forfeiture  law.  "  Under 
these  circumstances,"  the  Court  record  states,  "the  receiver 
at  the  instance  of  Mr.  George  Stephen  and  other  large  bond- 
holders (James  J.  Hill,  Donald  A.  Smith  and  Norman  W. 
Kittson)  hurried  to  Court,  and  got  an  order  on  April  18, 
1878,  to  get  authority  to  issue  debentures  to  complete  the  ex- 
tensions." 13  Under  the  authority  of  the  Court,  Farley,  from 

12  Farley  vs.  Norman  W.  Kittson  et.  al.,  Minnesota  Reports,  Vol. 
XXVII,  p.  103. 

13  John   S.   Kennedy  et.   al.  vs.  The   St.   Paul  and   Pacific  Railway 
Company,  et.  al.,  Dillon's  Circuit  Court  Reports,  1879-1880,  Vol.  V,  p. 
527. 


254  ERA   OF   RAILWAY    MAGNATES 

the  funds  advanced  by  the  Hill-Stephen  syndicate,  caused  125 
miles  of  railway  to  be  constructed  at  an  aggregate  cost  of 
$1,016,300.  This  extension  gave  an  unbroken  connection  be- 
tween the  city  of  St.  Paul,  Minnesota,  and  the  railway  sys- 
tem in  Manitoba. 

The  next  step  was  to  get  from  the  Canadian  Government  a 
lease  to  the  St.  Paul  and  Pacific  Railway  Company  of  the 
Pembina  branch  of  the  Canadian  Pacific  Railway,  the  con- 
struction of  which  had  been  done  at  Canada's  expense.  On 
March  7,  1878,  a  dispatch  had  been  published  in  the  Toronto 
Globe  stating  that  the  St.  Paul  Pioneer  Press  had  editorially 
asserted  that  the  purchasers  of  the  St.  Paul  and  Pacific  Rail- 
way bonds  were  Hill,  Kittson,  Smith  and  Stephen.  The 
editorial  further  affirmed  that  they  had  effected  a  lease,  on 
favorable  terms,  of  the  Pembina  branch,  and  warning  "  an- 
tagonistic parties "  not  to  waste  valuable  time  in  trying  to 
get  that  branch,  the  lease  of  which,  it  was  averred,  was  thus 
already  secured. 

i 

An  Exciting  Day  in  Parliament 

On  April  4,  1878,  Schultz  inquired  in  the  Dominion  House 
of  Commons  whether  any  such  arrangement  had  been  made. 
Premier  Mackenzie  replied  negatively.  If,  said  Schultz,  the 
Premier's  statement  was  true,  then  Hill  and  associates  must 
have  been  "  using  the  grossest  falsehoods  for  the  purpose  of 
preventing  the  Northern  Pacific  and  other  railroads  from  ask- 
ing that  connection  with  our  line  which  they  [Hill,  etc.]  were 
seeking  for  themselves."  14  Referring  to  Hill  and  Smith,  Mac- 
kenzie Bowell  said  that  care  should  be  taken  as  to  the  placing 
of  such  power  "  in  the  hands  of  the  same  parties  who  have 
exacted  enormous  freight  rates  from  the  people  of  the  North- 

14  Debates  in  the  House  of  Commons,  etc.,  1878,  Vol.  IV,  pp.  355 
and  1680. 


ERA   OF   RAILWAY   MAGNATES  255 

west  —  rates  so  enormous  that  they  almost  doubled  the  cost 
of  goods  taken  into  that  country."  15 

In  fact,  Bowell  more  than  implied  that  Donald  A.  Smith 
was  using  his  position  in  Parliament  for  the  personal  benefit 
of  himself  and  associates.  If,  Bowell  said,  the  dispatch  from 
St.  Paul  was  true,  then  "  we  have  the  extraordinary  spectacle 
in  the  House  of  the  champion  of  this  proposed  lease  using 
his  power  and  influence  as  a  very  humble  and  obedient  sup- 
porter of  the  Government  to  secure  to  himself  and  his  part- 
ners the  advantage  of  a  lease.  Either  it  was  true,  or  it  was 
not  true."  Bowell  declared  that  he  was  inclined  to  infer  its 
truth  from  the  fact  that  Smith  had  not  denied  a  charge  of 
this  kind  made  twice  in  the  House.16 

More  Attacks  on  Mr.  Smith 

Sir  John  A.  Macdonald  accused  Smith  of  more  warmly  and 
strongly  advocating  the  lease  Bill,  "  which  is  in  his  own  in- 
terest and  which  will  put  money  in  his  own  pocket,"  than  the 
Minister  who  introduced  it.  Macdonald  termed  it  a  fraudu- 
lent measure.17  More  opposition  came  from  another  House 
member,  Mr.  White.  "  There  seems,"  said  White,  "  to  be  a 
party  in  the  House  —  a  very  prominent  party  —  who  cares 
more  for  the  Hudson's  Bay  Company,  the  Montreal  Bank  and 
private  matters  than  for  the  interests  of  the  people  of  Mani- 
toba. .  .  .  No  one  will  believe  that  the  honorable  member  for 
Selkirk  [Smith]  cares  as  much  for  the  interests  of  the  coun- 
try generally  as  he  does  for  his  own  pocket.  .  .  ." 18 

When  during  this  debate  Smith  made  a  defense  of  his  ac- 
tions, Schultz  said  in  reply  that  he  (Schultz)  "would  content 

15  Ibid.,  p.   1681.    Mackenzie   Bowell  was   later  Dominion   Minister 
of  Customs  and   Minister  of  Trade  and   Commerce. 
™Ibid.f  p.  1689. 

17  Ibid,,  pp.  1690-1691. 

18  Ibid.,  p.  1692. 


256  ERA  OF   RAILWAY   MAGNATES 

himself  simply  with  commending  to  that  honorable  gentleman 
[Smith]  the  story  of  a  gentleman  in  New  York,  who,  when 
wishing  to  state  directly  his  opinion  of  the  veracity  of  a  per- 
son he  believed  to  be  a  consummate  liar,  said  of  him,  '  That 
all  he  could  say  was  if  he  should  meet  him  going  down  Broad- 
way with  Annanias  and  Sapphira  he  should  take  all  three  tox 
belong  to  the  same  family.'  "  19 

When,  on  May  9,  1878,  Premier  Mackenzie  served  notice 
for  adjournment,  and  denounced  the  Senate's  action  in  throw- 
ing out  the  Pembina  Branch  Bill,  Sir  John  A.  Macdonald 
scored  Mackenzie  and  commended  the  Senate's  action  "  which 
would  put  a  stop  to  their  [the  Government's]  bargain  with 
the  honorable  member  for  Selkirk  to  make  him  a  rich  man 
and  to  pay  him  for  his  servile  support.  .  .  .  The  circum- 
stances of  an  honorable  gentleman  [Smith]  getting  up  and 
advocating  a  proposal  in  which  he  was  interested  was  sus- 
picious." 20 

Lease  of  the  Pembina  Branch 

The  Mackenzie  Government,  however,  did  make  a  lease 
with  George  Stephen,  on  August  3,  1878,  granting  exclusive 
running  powers  for  ten  years  over  the  Pembina  branch,  ex- 
tending from  Pembina  to  Winnipeg,  to  the  St.  Paul  and  Pa- 
cific Railway  (or  as  it  was  later  termed,  the  St.  Paul,  Min- 
neapolis and  Manitoba  Railway). 

But  Mackenzie's  Government  was  soon  put  out  of  power; 
and  its  successor,  taking  advantage  of  a  certain  clause,  gave 
a  contract  to  Upper  and  Company  to  equip  and  operate  part 
of  the  road.  A  queer  transaction  now  developed.  One  of 
the  partners  of  that  firm  sold  out  to  a  Mr.  Willis  who,  accord- 
ing to  rumor,  was  in  fact  an  employe  and  agent  of  the  St. 
Paul  and  Pacific  Railway  coterie. 

.  1686. 

ol.  V,  pp.  2556-2557. 


ERA   OF   RAILWAY   MAGNATES  257 

Various  complications  now  set  in  of  too  involved  a  nature 
to  describe  here.  It  was  complained  that  the  St.  Paul  and 
Pacific  Railway  Company  formed  a  compact  for  a  uniform 
tariff  of  rates,  and  that  in  defiance  of  its  agreement  with  the 
Canadian  Government,  the  St.  Paul  and  Pacific  Railroad  Com- 
pany was  interchanging  traffic  with  the  steamboats  of  the  Red 
River  Transportation  Company,  thus  lessening  the  chances  of 
Upper  and  Company  making  their  undertaking  pay.21  The 
sequel  was  that  Upper  and  Company  came  to  an  understand- 
ing by  which  the  St.  Paul  and  Pacific  obtained  running  rights. 

Hill,  Smith,  S'tephen  and  Company  Get  the  Railroad 

On  April  n,  1879,  a  final  order  of  foreclosure  was  de- 
creed, and  on  June  14,  1879,  the  St.  Paul  and  Pacific  Railway 
was  sold  to  Hill  and  associates  composing  what  was  called 
the  St.  Paul,  Minneapolis  and  Manitoba  Railroad  Company, 
which  Hill  and  associates  had  organized  a  month  before  the 
sale  for  the  express  purpose  of  buying  the  St.  Paul  and  Pacific 
Railway  under  foreclosure.  The  total  sum  for  which  the  road 
was  sold  was  $6,780,000,  and  they  were  allowed  to  turn  in 
receiver's  debentures  and  bonds  in  payment. 

Farley  later  testified  that  this  railroad  thus  sold  for  $6,780,- 
ooo  was  then  worth,  at  the  very  least,  $15,000,000.  In  fact, 
in  the  suit  in  1880  of  Wetmore  vs.  the  St.  Paul  and  Pacific 
Railroad  Company,  to  set  aside  the  sale,  Judge  Miller,  in  the 
United  States  Circuit  Court,  estimated  the  565  miles  of  rail- 
road and  the  land  grant  of  2,586,606  acres  to  be  worth  $20,- 
000,000  or  more.22 

Hill  and  associates  not  only  owned  the  St.  Paul  and  Pa- 
cific bonds,  but  they  apportioned  the  stock  among  themselves. 
Hill  and  Kittson  each  received  57,646  shares  of  stock,  and  the 

21  Monetary  Times,  May  9,  1879. 

22  Dillon's  Circuit  Court  Reports,  1879-1880,,  Vol.  V,  p.  531. 


258  ERA   OF   RAILWAY    M  AGNATES  ~ 

other  members  of  the  syndicate  their  share.23  From  a  part 
of  the  land  grant  alone,  aside  from  the  railroad  property  it- 
self, Hill  and  associates  at  once  obtained  more  than  twice  the 
sum  that  they  had  paid  for  the  whole  property.  Immediately 
after  the  foreclosure  sale,  they  sold  the  greater  part  of  the 
land  grant  for  $13,068,887. 

There  now  remains  a  large  and  vital  question.  How  and 
where  did  Hill,  Kittson,  Smith  and  Stephen  get  the  funds  with 
which  they  consummated  the  St.  Paul  and  Pacific  Railway 
transaction  ? 


A  Troublous  Bank  of  Montreal  Meeting 

In  1879,  financial  circles  in  Montreal  were  excited  by  the  re- 
port that  many  millions  of  dollars  had  been  taken  out  of  the 
Bank  of  Montreal,  without  the  consent  or  knowledge  of  the 
directors,  and  put  into  the  St.  Paul  and  Pacific  Railway.  The 
meeting  of  the  bank's  shareholders,  on  June  4,  1879,  was  a 
stormy  one.  The  official  stenographic  published  report  of  that 
meeting  contained  this  paragraph: 

"  Mr.  John  McDonald  said  that  he  coincided  to  what  had 
been  said  in  regard  to  bank  losses.  .  .  .  There  never  was  such 
a  melancholy  statement  offered  to  the  shareholders  as  this 
one.  The  advances  to  directors  towered  far  beyond  a  million 
dollars.  He  would  like  to  see  men  at  the  head  of  the  insti- 
tution who  would  not  require  such  accommodation.  (Ap- 
plause.) It  had  been  rumored  outside  that  some  of  the  di- 
rectors were  largely  interested  in  a  road  in  the  West,  and 
required  a  large  amount  on  that  account." 

Similar  comments  were  made  by  other  shareholders.  Don- 
ald A.  Smith,  who  had  become  a  Bank  of  Montreal  director 
in  1873,  denied  that  the  railway  referred  to  was  indebted  to 
the  bank.  General  Manager  Richard  B.  Angus  said  regard- 

23  United  States  Reports,  Vol.  CXX,  p.  308. 


ERA   OF   RAILWAY    MAGNATES  259 

ing  the  Directors'  loans  that  "  it  would  not  be  judicious  at  any 
time  to  give  even  a  detailed  statement  of  those  accounts."  2* 

Pointed  Questions 

Commenting  on  this  meeting,  the  Monetary  Times  said 
editorially,  June  13,  1879:  ".  .  .  The  recent  meeting  of  the 
Bank  of  Montreal  presented  a  remarkable  contrast  to  what 
has  been  customary  on  those  occasions  for  many  years,  back. 
.  .  .  Some  rather  pointed  questions  were  put  with  reference 
to  certain  large  advances  said  to  have  been  made  by  the  Bank 
for  railway  purposes  which,  however,  were  only  met  by  the 
statement  that  although  the  advances  were  large,  undoubted 
security  was  held  for  them.  This  is  not  an  uncommon  phase 
with  bankers  when  inconvenient  questions  are  put  by  inquisi- 
tive stockholders,  and  it  might  have  been  well  to  be  a  little 
more  precise.  Certain  advances  to  directors  of  the  Bank  were 
also  the  subject  of  criticism.  These  were  met  by  the  some- 
what bluff  statement  that  if  these  advances  were  required  to 
be  paid  off,  the  Bank  could  have  its  money  in  a  short  time. 
This  answer,  though  it  amounted  to  very  little,  appeared  to 
have  the  desired  effect,  and  no  further  questions  on  the  sub- 
ject were  asked.  With  regard  to  certain  large  accounts,  the 
information  was  given  that  the  Bank  had  only  four  in  which 
the  advances  exceed  $400,000;  but  by  how  much  these  ac- 
counts exceed  this  sum  was  not  informed.  .  .  ." 

Alleged  Source  of  $8,000,000 

Much  mystery  was  maintained  as  to  precisely  what  had 
happened.  But  a  few  years  later  John  Charlton  represented 

24  See  Toronto  Globe  and  other  newspapers  of  June  5th,  1879.  Lord 
Strathcona  and  Mount  Royal  is  still  one  of  the  largest  shareholders  in 
the  Bank  of  Montreal ;  he  holds  2,777  shares. —  See,  List  of  Share- 
holders in  the  Chartered  Banks  of  Canada  (published  by  the  Dom. 
Gov't),  p.  48. 


2(X)  ERA   OF   RAILWAY    MAGNATES 

the  case  thus  in  the  Dominion  House  of  Commons  when  de- 
scribing the  composition  and  antecedents  of  the  personnel  of 
the  chief  owners  of  the  Canadian  Pacific  Railway  Company: 

"  A  member  of  this  Company  was  once  President  of  the 
Bank  of  Montreal  —  a  responsible  position.  When  in  that 
position  he  [Stephen]  took  $8,000,000  from  the  chest  of  the 
Bank  of  Montreal  without  the  consent  or  knowledge  of  the 
directors  of  that  bank, —  at  least  he  is  reported  to  have  done 
so.  He  is  reported  to  have  invested  it  in  the  St.  Paul  and 
Minneapolis  Railway.  Now,  supposing  this  gentleman  when 
he  removed  the  money  from  the  bank,  and  invested  it,  had 
lost  the  money,  he  would  have  been  a  defaulter  to  the  extent 
of  $8,000,000;  but  I  hold  that  although  the  investment  was 
successful,  though  he  was  enabled  to  return  the  money,  mor- 
ally his  conduct  was  just  as  reprehensible  as  if  he  had  lost 
every  cent.  I  say  he  had  no  business  to  take  $8,000,000  be- 
longing to  a  corporation  of  which  he  was  president,  without 
the  knowledge  of  the  directors,  and  use  that  money  in  any 
speculation  whatever." 

Charlton  might  have  added,  by  way  of  contrast,  that,  in 
1876,  one  Barber,  a  clerk  of  the  Bank  of  Montreal  under 
President  George  Stephen,  had  been  sentenced  to  five  years 
in  the  penitentiary  for  embezzling  funds  with  which  to  spec- 
ulate in  stocks. 

"  He  is  reported,"  Charlton  went  on,  still  referring  to  George 
Stephen,  "  to  have  invested  that  money,  as  I  have  said,  in  the 
St.  Paul  and  Minneapolis  Railway,  and  through  collusion  with 
the  Receiver  of  that  road,  it  is  said  he  procured  a  report  as 
to  the  condition  of  its  affairs  which  was  sent  to. Holland,  where 
the  stock  was  held,  which  report  induced  the  Dutch  bondhold- 
ers and  stockholders  to  part  with  their  interest  in  the  road  at 
less  than  it  was  worth,  thus  enabling  them  to  buy  the  road 
at  less  than  its  value.  And  having  used  the  Receiver  as  his 
tool,  he  forgot  the  old  adage,  that  there  should  be  honor  among 


ERA  OF   RAILWAY   MAGNATES  26 1 

thieves.  He  is  charged  with  having  forgotten  to  give  the  Re- 
ceiver his  share  of  the  plunder,  and  the  Receiver  is 
said  to  have  brought  suit  in  the  United  States  Court  at 
St.  Paul.  The  Court  refused  to  entertain  the  suit  on  the 
ground  that  it  would  not  degrade  itself  by  giving  a  decision  as 
to  how  plunder  should  be  divided  among  different  members  of 
a  gang.  .  .  ." 25  Charlton  omitted  to  add  that  Richard  B. 
Angus,  General  Manager  of  the  Bank  of  Montreal,  had  re- 
signed in  1879  to  take  charge  of  the  financial  management  of 
the  St.  Paul,  Minneapolis  and  Manitoba  Railway.  At  the 
same  time,  Donald  A.  Smith  ceased  to  be  governor  of  the 
Hudson's  Bay  Company,  and  Charles  J.  Brydges  became  Land 
Commissioner  of  that  Company.26 

Farley  Sues  for  His  Share 

In  truth,  Receiver  Farley  did  bring  suit  against  Kittson, 
Hill  and  associates,  in  the  Minnesota  Supreme  Court,  and 
did  claim  one-fifth  of  the  capital  stock  of  the  railroad  and  one- 
fifth  of  all  other  securities  and  property  acquired  by  that 
syndicate,  which  claim  he  based  upon  his  assertion  that  they 

25  Debates,  House  of  Commons,  Dom.  Parl.,  1884,  Vol.  I,  pp.  390- 

3Qi- 

26  We  have  repeatedly  referred  to  Brydges'  railroad  career.     A  word 
more  as  to  his  bank  activities.     He  was  president  of  the  Mechanics' 
Bank  which  suspended  in  1879  with  only  $2,500  actual  cash  on  hand 
to  meet  a  circulation  of  $168,000  payable  on  demand !     "  Well  know- 
ing," commented  the  Monetary  Times,  January  6,  1879,  "  what  slender 
resources  were  at  its  command  for  meeting  liabilities,  the  managers 
have  pushed  its  notes  into  circulation  by  the  most  improper  methods. 
.  .  ,  The    bank    had    several    agencies    in    the    country    districts    of 
Lower  Canada,  and  almost  the  sole  business  of  these  agencies  was  to 
force  the  notes  of  the  Mechanics'  Bank  upon  the  unsuspecting  people 
of  the  locality.     Not  content  with  paying  out  the  bills  of  the  bank 
over  the  counter  in  the  ordinary  way,  its  agents  would  visi*  hotels, 
board  steamboats  and  employ  other  persons  to  do  the  same  thing,  solely 
to  gather  in  the  bills  of  other  institutions  and  exchange  them  for  bills 
of  the  defunct  bank.  ...     It  is  notorious  that  many  banks,  generally 
the  smaller  ones  in  the  Province  of  Quebec,  are  pursuing  precisely  the 
same  tactics  to  get  out  their  bills.  .  .  ." 


262  ERA   OF   RAILWAY    MAGNATES 

had  got  the  property  by  reason  of  his  collusion.  But  Judge  Gil- 
fillan,  in  the  absence  of  the  production  of  any  written  agree- 
ment, decided  that  Farley  had  not  proved  his  case.27 

Likewise,  Farley  sued  the  St.  Paul,  Minneapolis  and  Mani- 
toba Railroad  Company  in  the  United  States  Circuit  Court. 
The  attorneys  for  the  railway  had  an  effective  plea  ready. 
They  urged  that  the  case  be  non-suited  on  the  ground  that 
a  court  official  —  which  the  Receiver  was  —  who  had  be- 
trayed his  trust  had  no  standing  in  court.  To  rid  themselves 
of  Farley's  claims  they  admitted  his  contention  of  collusion! 
Here  was  fine  candor!  In  this  plea  Judges  Treat  and  Nel- 
son, in  1882,  concurred,  saying  in  part: 

"  Courts  will  not  and  ought  not  be  made  the  agencies 
whereby  frauds  are  in  any  respect  recognized  or  aided.  They 
will  not  unravel  a  tangled  web  of  fraud  for  the  benefit  of  any- 
one enmeshed  therein  through  whose  agency  the  web  was 
woven.  Especially  must  that  be  a  rule  where  a  trusted  officer 
of  a  court,  whose  position  is  both  advisory  and  judiciary, 
seeks  its  assistance  to  compel  alleged  confederates  to  share 
with  him  the  spoils  acquired  through  his  concealments  and 
deceits,  which  he  admits  were  deemed  by  his  confederates 
and  his  confederates  necessary  to  their  success  through  his 
betrayal  of  his  trust."  28 

Then  followed  other  parts  of  the  Court's  decision  practi- 
cally confirming  Farley's  statements  that  he  had  entered  into 
a  conspiracy  of  collusion  with  Hill,  Kittson  and  their  part- 
ners, on  the  one  hand,  and  Kennedy,  on  the  other.  "  The 
plaintiff,"  continued  the  decision,  "  conceived  a  scheme  to 
wreck  the  vast  railroad  interests  which  it  was  his  duty  to  pro- 
tect. Through  a  betrayal  of  his  trust  under  such  circum- 
stances, according  to  his  version  of  the  facts,  these  vast 

27  Minnesota  Reports,  Vol.  XXVII,  pp.  102-107. 

28  Federal  Reporter,  Vol.  XIV,  pp.   114-118. 


ERA   OF   RAILWAY    MAGNATES  263 

railroad  properties  have  been  secured,  and  a  profit  realized 
of  $15,000,000  or  more." 29 


Farley  Loses;  the  Rest  Become  Multimillionaires. 

Farley  carried  his  suit  twice  to  the  Supreme  Court  of  the 
United  States,  but  after  thirteen  years  of  litigation  the  final 
decision  was  adverse  to  him  on  the  ground  that  he  had  not 
proved  his  claim.30 

But  what  of  the  men  whom  Farley  alleged  conspired  with 
him,  or  who  were  alleged  to  have  profited  by  his  betrayal  of 
duty?  It  is  almost  superfluous  to  describe  their  rapid  ascent. 
The  capitalization  of  this  particular  railroad  was  gradually 
run  up  to  $210,000,000.  Hill  became  the  great  multimillion- 
aire railway  autocrat  of  the  north-west  United  States.  Ken- 
nedy became  a  multimillionaire;  when  he  died,  in  1909,  his 
fortune  was  estimated  at  from  $30,000,000  to  $60,000,000, 
according  to  the  estimates  put  upon  the  value  of  his  enormous 
pile  of  railway  stock.  George  Stephen,  as  we  shall  see,  was, 
before  many  years,  created  a  Sir,  and  then  raised  to  the 
peerage  as  Lord  Mount  Stephen.  Donald  A.  Smith,  in  1886, 
was  created  a  Knight  Commander  of  the  Most  Distinguished 
Order  of  St.  Michael  and  St.  George,  and  subsequently  Lord 
Strathcona  and  Mount  Royal. 

29  Ibid.,  p.  117. 

so  See  United  States  Reports,  Vol.  CXX,  pp.  303-318  and  Ibid.,  Vol. 
CL,  pp.  572-577- 


CHAPTER  XIV 
PROGRESS  OF  THE  RAILWAY  LORDS 

Flushed  with  their  success  in  acquiring  the  St.  Paul  and 
Pacific  Railway,  five  of  the  men  concerned  or  interested  in 
that  transaction  soon  reached  out  to  get,  and  did  get,  an  even 
immensely  richer  prize.  This  was  the  contract  for  construct- 
ing the  Canadian  Pacific  Railway  and  the  proprietorship  of 
that  railroad. 

These  five  men  were  George  Stephen,  James  J.  Hill,  John 
S.  Kennedy,  Richard  B.  Angus,  together  with  Donald  A. 
Smith,  who,  although  his  name  did  not  appear  in  the  contract, 
was  an  active  directing  figure  in  the  group.  Compacted  with 
them  in  the  contract  were  Donald  Mclntyre  of  Montreal  and 
two  banking  firms,  that  of  Morton,  Rose  and  Company  of 
New  York  and  London  and  the  house  of  Kohn,  Reinach  and 
Company  of  Paris,  France. 

Macdonald  Returns  to  Power 

Out  of  power  had  gone  the  Government  headed  by  Mac- 
kenzie, and  back  to  Premiership  had  come  Sir  John  A.  Mac- 
donald, in  October,  1878.  Only  a  few  years  previously  the 
great  Canadian  Railway  charter  scandal  had  dislodged  Mac- 
donald from  his  high  power,  and  made  his  administration  a 
by-word.  It  had  not  seemed  possible  that  he  could  ever  re- 
sume the  office  of  Prime  Minister.  The  forces  that  put  him 
back  were,  to  a  large  extent,  economic  forces. 

True,  Macdonald  was  an  astute  politician  who  was  cred- 


PROGRESS   OF   RAILWAY    LORDS  265 

ited  with  sagaciously  knowing  how  to  ally  himself  with  the 
Roman  Catholic  hierarchy,  on  the  one  hand,  and,  on  the  other, 
with  the  Orangemen.  But  Sir  Richard  Cartwright  points  out 
the  real  forces  chiefly  exerting  themselves  to  get  Macdonald 
back  in  office.  The  manufacturers  wanted  high  tariff  du- 
ties ;  and  as  Macdonald  was  willing  to  give  them  all  that  they 
wanted,  they  raised  a  large  campaign  fund  for  him  and  his 
party,  and  having  very  considerable  influence  with  the  news- 
paper press  they  also  swayed  the  opinions  of  the  electorate. 
There  was  also,  Cartwright  asserted,  an  influential  body  of 
contractors  who  "  resented  being  held  fast  to  their  engage- 
ments and  longed  exceedingly  for  a  renewal  of  the  regime 
under  which  comfortable  repayment  in  the  shape  of  liberal 
extras  could  always  be  reckoned  on  in  return  for  a  subscrip- 
tion to  party  funds  at  the  right  moment."  1 

Too  much  of  a  monotone  of  partisan  bias  colors  Cart- 
wright's  positiveness ;  without  doubt,  his  asseverations  contain 
truth,  yet  not  the  whole  truth;  with  equal  accuracy  Macdon- 
ald's  supporters  could  have  retorted  and  could  have  produced 
the  proofs  that  under  Mackenzie's  administration  certain  con- 
tractors had  grown  rich. 

Somber  and  cynical  is  the  picture  drawn  by  Sir  Richard 
Cartwright  of  the  state  of  public  mind  at  that  period.  The 
general  public,  according  to  him,  had  "  given  up  expecting 
anything  like  honor  or  honesty  in  politics  from  public  men."  : 

Politics  was,  in  fact,  a  business;  the  Canadian  Parliament 
was  crowded  with  men  who  were  there  to  initiate,  extend  or 
conserve  class  or  personal  interests ;  of  the  206  members  of 
the  Dominion  House  of  Commons,  in  1878,  there  were  56 
merchants,  55  lawyers,  12  gentlemen  of  leisure,  and.  an  as- 
sortment of  manufacturers,  insurance  company  presidents, 
shipbuilding  and  lumber  capitalists,  contractors,  and  a  few 

1  See  Cartwright's  Reminiscences,  pp.  189-191. 
QIbid.,  p.  256. 


266  PROGRESS   OF   RAILWAY   LORDS 

journalists,  physicians  and  farmers.3  The  same  ratio  held 
true  of  successive  Parliaments.  Cartwright's  error,  however, 
consisted  in  regarding  the  exposures  in  1873  as  tne  ^rst  an(^ 
original  evidence  of  "  official  corruption  and  degradation." 
Those  exposures  were  doubtless  striking,  but,  as  we  have  seen, 
they  had  been  preceded  by  a  series  of  different  scandals  each 
of  which  had,  in  its  day,  been  impressive. 

Canadian  Pacific  Railway  Contract. 

Apparently  the  Canadian  Pacific  Railway  project  was  re- 
moved from  being  made  an  instrument  of  profit  to  contract- 
ors, for  in  1880  the  Dominion  House  of  Commons  had 
approved  a  resolution  to  construct  that  railway  as  a  Govern- 
ment work.  Suddenly,  a  few  months  later,  the  Macdonald 
Administration  announced  its  intention  of  giving  the  contract 
for  the  entire  scheme  to  a  syndicate  composed  of  George 
Stephen  and  Company.  Donald  A.  Smith's  name  was  absent 
in  this  contract.  But  his  partners  or  close  business  associates 
were  its  principal  beneficiaries.  Mr.  Smith  at  this  juncture 
kept  most  diffidently  in  the  background. 

When  the  provisions  of  this  contract  were  made  public, 
the  expressions  of  general  astonishment  were  loud  and  great. 
When  had  any  Company,  excepting  the  Hudson's  Bay  Com- 
pany, been  invested  with  such  extraordinary  privileges  and 
powers,  immunities  and  rights?  What  group  of  men  had 
ever  received  such  vast  subsidies  in  both  money  and  land  as 
were  proposed  in  this  all-empowering  charter?  Every  reser- 
vation, qualification  and  limitation  of  powers  contained  in  the 
original  Act  of  1874  were  set  aside  by  the  provisions  of  this 
charter,  and  privileges  and  powers  never  originally  contem- 
plated were  lavishly  conferred  upon  a  mere  handful  of  alert 
promoters. 

3  Monetary  Times,  May  3,  1878,  p.  1285. 


PROGRESS   OF   RAILWAY    LORDS  267 

A  Gift  of  $62,000,000  and  25,000,000  Acres 

By  the  terms  of  this  munificent  contract  the  Government 
obligated  itself  to  complete  certain  unfinished  parts  of  the 
railway,  and  to  transfer  to  Stephen  and  partners  for  their  own 
benefit  more  than  700  miles  of  railway  the  construction  of 
which  ultimately  cost  the  Government  $37,785,000.  In  these 
700  odd  miles  was  included  the  important  and  much-coveted 
Pembina  branch,  forming  the  connecting  link  of  the  St.  Paul 
and  Pacific  Railway  to  Winnipeg.  The  contract  apparently 
made  a  gift  to  the  contractors  of  $25,000,000  but  it  actually 
involved  a  total  contribution  by  the  Canadian  Government  of 
more  than  $62,000,000  which  sum  was  further  augmented  by 
necessary  expenditures  to  extinguish  the  Indian  title  to  lands 
granted  to  Stephen  and  associates.  These  additional  outlays 
were  equal,  if  capitalized,  to  $30,000,000  more. 

And  what  was  the  entirety  of  this  land  grant?  A  huge 
domain  of  25,000,000  acres  of  choice  lands,  valued  even  in 
that  day  before  the  great  inrush  of  settlers  began,  at  $79,500,- 
ooo  at  the  very  least  estimate. 

Extraordinary  Powers  Given 

These  were  tar  from  being  the  only  donations  made  in  the 
contract.  It  was  distinctly  provided  that  in  making  the  land 
grant  only  land  fairly  suitable  for  settlement  was  to  be  al- 
lotted the  contractors.  In  other  words,  they  were  to  have 
the  pick  of  the  finest  lands,  for  the  contract  further  specified 
that  they  were  to  have  large  powers  of  selection  of  the  land.4 
They  were  also  to  control  the  land  sales. 

4  The  extraordinary  powers  and  property  conferred  by  these  pro- 
visions may  be  better  understood  by  comparing  this  land  grant  with 
the  railway  land  grants  in  the  United  States.  The  grants  in  the 
United  States  consisted  invariably  of  arbitrary  alternate  sections,  which 
is  to  say  that  the  railway  companies  had  to  take  their  chances  on  the 


268  PROGRESS  OF  RAILWAY  LORDS 

Then  came  other  vast  and  expansive  powers  given  in  the 
contract.  All  property  and  the  capital  stock  were  to  be  ex- 
empted from  taxation  by  the  Dominion  and  Provincial  gov- 
ernments and  by  the  municipalities.  This  exemption  was  not 
a  limited  but  a  perpetual  one.  Likewise  the  land  grant  was 
to  be  exempted  from  taxation,  until  sold  or  occupied,  for  20 
years  from  the  date  of  the  grant.  This  was  a  privilege  of 
itself  worth  great  sums  of  money. 

Further,  the  contract  exempted  from  import  duties  a  large 
part  of  the  materials  required  to  construct  the  railway.  In 
certain  directions  it  guaranteed  the  Company  a  monopoly  of 
railroad  construction  and  traffic  for  a  period  of  20  years.  An- 
other clause  productive  of  great  complaint  was  inserted.  By 
this  clause  the  Government  bound  itself  not  to  reduce  —  or 
in  other  language,  regulate  —  the  Company's  railway  rates  un- 
less the  Company  made  a  net  revenue  exceeding  10  per  cent,  on 
the  capital  invested  in  the  construction  of  the  railway.  This 
was  a  provision  especially  arousing  distrust  and  apprehension  ; 
it  was  pointed  out  that  by  stock-juggling  devices,  the  profits 
could  always  be  nominally  made  to  appear  lower  than  10  per 
cent.,  and  thus  perpetually  furnish  a  legal  justification  for  ex- 
torting high  railway  rates.  This,  it  may  be  parenthetically 
said,  is  precisely  what  did  happen. 

The  contract  also  provided  for  the  payment  of  the  money 
subsidies  and  land  grants  in  amounts  entirely  disproportion- 
ate to  the  prairie  section  of  the  railway,  the  construction  of 
which  section  was  the  easiest  and  most  profitable,  and  which 
was  intended  by  the  contractors  to  be  the  earliest  completed. 
Finally,  the  contract  gave  the  fullest  power  forever  to  the 
company  to  build  branch  lines  in  various  parts  of  the  Doniin- 

quality  of  land  that  they  were  allotted.  It  might  be  good  agricultural 
or  timber  land  or  poor,  barren  land.  The  Canadian  Pacific  Railway 
Company  received  alternate  sections,  also,  but  it  had  powers  of  selection 
such  as  railway  companies  in  the  United  States  did  not  have. 


PROGRESS   OF   RAILWAY   LORDS  269 

ion,  and  it  incorporated  various  other  important  comprehen- 
sive powers  and  privileges. 


Futile  Opposition  to  the  Charter 

A  competing  company  of  Canadian  capitalists  offered  terms 
much  more  favorable  to  the  Government,  and  sought  to  get 
a  contract  for  the  Canadian  Pacific  Railway.  But  the  allega- 
tion was  made  that  its  offer  was  not  genuine.  Its  efforts  were 
in  vain.  Amendment  after  amendment  to  the  Stephen-Hill 
contract  was  introduced  in  the  Dominion  House  of  Commons 
by  opponents.  Specifying  the  immense  powers  and  rights  do- 
nated in  the  contract  to  a  handful  of  men,  they  emphasized 
the  fact  that  none  of  these  powers  had  been  contained  in  the 
original  Act  of  1874.  They  insisted  that  the  direct  gift  of 
$25,000,000  and  of  25,000,000  acres  of  land  was  not  in  the  pub- 
lic interest  and  should  not  be  legalized.  The  exemption  of  all 
of  the  Company's  property  and  capital  stock  from  taxation 
was  condemned  by  them.  They  called  attention  to  the  fact 
that  the  clause  in  the  original  Act  by  which  the  Government 
had  power  to  acquire  the  railway  whenever  it  was  considered 
advisable  by  the  public  interest,  was  stricken  out  in  the  con- 
tract. 

Amendments  offered  by  Sir  Albert  Smith,  Sir  Richard  Cart- 
wright,  Wilfrid  Laurier,  David  Mills  and  19  other  members 
of  the  House  of  Commons  were  all  voted  down.5  The  chief 
argument  used  by  Macdonald  and  his  majority  was  that  to 
facilitate  the  colonization  and  settlement  of  the  West,  a  trans- 
continental railway  wras  necessary,  and  that  no  capitalists  would 
construct  it  unless  they  were  given  the  fullest  aid  and  encour- 
agement. A  resolution  in  favor  of  tfje  contract  being  given 
to  George  Stephen  and  associates  was  then  carried,  and  on 

5  Debates,  tiouse  of  Commons,  Dom.  Parl,  Session  1880-1881,  Vol. 
I,  pp.  702-764. 


2/O  PROGRESS   OF   RAILWAY   LORDS 

February  17,  1881,  a  Bill  incorporating  the  Canadian  Pacific 
Railway  Company  was  passed.  Subsequently,  it  may  here  be 
said,  that  Company  received  a  gift  of  1,702,458  acres  of  more 
land  grant  for  its  Souris  branches. 

Now  the  way  was  wide  open  for  George  Stephen  and  part- 
ners to  gather  in  fortunes  of  hundreds  of  millions  of  dollars, 
all  within  a  few  years.  That  they  quickly  availed  themselves 
of  the  opportunities  thus  presented  was  soon  evident. 

Chinese  Coolie  Labor  Imported 

First,  the  contractors  organized  a  construction  company 
composed  of  themselves  or  dummies,  thus  ensuring  themselves 
from  the  outset  an  enormous  profit  on  construction  and  greatly 
increasing  the  cost. 

At  the  same  time  they  or  the  subcontractors  imported  gangs 
of  Chinese  coolies  to  do  much  of  the  work  of  construction  in 
the  West  at  the  cheapest  possible  outlay.  Robert  Ward,  a 
commission  merchant,  shipping  agent  and  agent  for  railroad 
contractors,  testified  before  the  Royal  Commission  on  Chinese 
Labor  that  "  in  1882  my  firm  had  between  5,000  and  6,000 
Chinese  consigned  to  them  from  Hong  Kong.  These  men 
were  under  engagement  to  the  contractors  of  the  Canadian 
Pacific  Railway,  and  arrived  in  ten  different  vessels  .  .  ."  6 
Andrew  Onderdonk,  a  civil  engineer  and  Canadian  Pacific 
Railroad  subcontractor,  testified  that  he  had  employed  as 
many  as  6,000  Chinese  at  one  time.7  The  Chinese,  testified 
another  witness,  were  slaves  to  all  intents  and  purposes ;  they 
were  exploited  by  the  Chinese  Companies  who  sold  them  in 
semi-servitude  to  the  white  contractors.  The  Chinese,  he 
said,  "  were  welcomed  by  the  same  class  of  individuals  that 

6  Report  of  the  Royal  Commission  on  Chinese  Labor,  1885,   Sess. 
Paper  No.  54  A,  p.  84,  Sess.  Papers,  Dom.  House  of  Commons,  Vol. 
XVIII,  No.  ii,  1885. 
id.,  p.  148. 


PROGRESS   OF   RAILWAY   LORDS  27! 

now  desire  to  perpetuate  their  stay  —  men  that  have  no  ob- 
ject beyond  their  own  aggrandizement  and  greed,  and  who 
would  worship  Confucius  rather  than  Christ  if  they  were  go- 
ing to  make  money  out  of  it."  8 

The  habitations  of  the  Chinese  laborers  were  generally 
wretched  hovels ;  they  lived  amid  filth  and  neglect.9  "  I  have 
never  yet  known  an  English  or  French  gentleman  from  the 
old  countries,"  testified  David  William  Gordon,  a  contractor 
and  builder  and  M.  P.,  for  Vancouver,  "  who  would  feed  their 
dogs  upon  the  food  consumed  by  the  ordinary  Chinese  la- 
borer." 10 

Construction  and  Land  Companies 

Profits  from  construction  work  thus  yielded  great  revenues. 
But  the  Canadian  Pacific  magnates  or  their  associates  organ- 
ized other  interconnected  agencies  from  which  they  extracted 
additional  great  wealth. 

One  of  these  was  the  Canadian  North  West  Land  Company 
formed  in  1882  to  acquire  5,000,000  acres  of  the  Canadian  Pa- 
cific Railway  land  grant.  The  controlling  spirits  in  this  Com- 
pany were  Lord  Elphinstone  in  England,  and  Donald  A.  Smith 
in  Canada.  One  of  the  managing  directors  was  Edmund  B. 
Osier,  the  distinguished  Canadian  millionaire  and  knight  of 
present  times.  By  1883,  fully  1,500,000  acres  had  been  con- 
veyed by  the  Canadian  Pacific  Railway  Company  to  the  Canada 
North  West  Land  Company,  and  of  that  amount  65,621  acres 
had  already  been  sold  at  an  average  price  of  nearly  $6  an 
acre.  At  the  Company's  annual  meeting,  in  1883,  Osier  spoke 
glowingly  of  the  Company's  prospects.  He  described  the  be- 
ginning of  the  overflow  of  the  population  of  the  United  States, 
and  asserted  that  the  Canada  North  West  Company  had  among 
the  best,  if  not  the  best,  lands  in  the  North  West.  Mr.  Os- 
ier's enthusiastic  speech,  as  officially  reported,  continued: 

p.  132.  » Ibid.,  p.    87.  K>Ibid.t  p.  134. 


PROGRESS   OF   RAILWAY   LORDS 

"  The  interests  which  this  Company  has  in  town  and  village 
sites  along  the  road  [the  C.  P.  R.]  is  one  which  must  come  in 
time  to  be  enormously  valuable.  .  .  .  Every  man  who  goes 
into  that  country  as  a  farmer  builds  up  a  little  village  near 
his  point  of  residence,  and  as  the  increase  of  population  goes 
on,  the  interest  we  have  in  town  and  village  sites  will  be  of 
enormous  value  (Hear!  hear!)  ...  I  believe  that  when  you 
have  half  your  land  sold  the  value  of  the  remaining  half  will 
be  very  much  greater  than  the  value  of  the  whole  estate 
today,  no  matter  how  valuable  it  may  be.  (Cheers.)  .  .  ."  u 

This,  however,  was  not  all  of  the  business  justifying  ex- 
uberant optimism. 

The  Canadian  Pacific  Railway  Company  had,  as  we  have 
noted,  agreed  to  sell  5,000,000  acres  of  land  to  the  Canada 
North  West  Land  Company.  Later,  the  quantity  purchased 
was  reduced  to  2,200,000  acres.  The  land  company  claimed 
exemption  from  municipal  and  school  taxation  on  all  lands 
that  had  not  actually  been  selected  by  it  and  conveyed. 

Of  this  asserted  exemption  the  Manitoba  Legislature,  in 
1888,  complained,  saying  that  although  evading  taxation  the 
Canada  North  West  Land  Company  was  "  exercising  rights 
of  ownership  and  control  over  said  lands,  in  many  instances 
leasing  and  selling  the  same  and  taking  the  profits  thereof." 
The  legislative  resolution  went  on  to  say  that  the  Company 
had  refused  to  pay  taxes  on  its  lands,  although  those  lands 
had  increased  in  value,  and  although  improvements  had  been 
paid  for  by  the  taxes  collected  on  the  adjoining  lands  of  set- 
tlers and  private  owners.  It  was  because  of  such  evasion  of 
taxation  and  claim  of  exemption,  the  resolution  further  said, 
that  many  municipalities  throughout  Manitoba  had  been 
obliged  "  to  impose  heavy  burdens  on  the  resident  and  indi- 
vidual landowners,  and  the  settlement  of  the  country  has  been 

11  Official  advertised  report  of  the  annual  meeting  in  the  Monetary 
Times,  July  20,  1883,  pp.  69^72. 


PROGRESS   OF   RAILWAY   LORDS  273 

greatly  retarded."  The  Government  was  called  upon  by  the 
resolution  to  assist  in  a  test  case  brought  by  one  of  the  munici- 
palities in  Manitoba  against  the  Canada  North  West  Land 
Company.12 

They  Gather  in  More  Millions 

Accompanying  these  transactions  were  a  series  of  other 
transactions  by  which  members  of  the  Canadian  Pacific  Rail- 
way Syndicate  pocketed  large  profits.  It  was  charged  that 
by  the  initial  manipulation  of  stocks  which  they  sold  to  them- 
selves at  25  cents  on  the  dollar,  they  made  a  collective  profit 
of  $9,000,000  at  the  very  start.  Another  method  was  by 

!*  Journals  of  the  Legislative  Assembly  of  Manitoba,  1888,  Vol.  XIX, 
pp.  61-62.  The  present  effects  of  that  clause  in  the  C.  P.  R.  contract 
with  the  Government  relieving  the  railway  company  from  taxation  for 
20  years  were  recently  set  forth  in  an  editorial  in  the  Grain  Growers' 
Guide,  published  at  Winnipeg.  The  editorial  (issue  of  September  24, 
1913),  said  in  part: 

"  What  we  want  to  call  special  attention  to  just  now,  however,  is  the 
heavy  burden  which  is  placed  upon  the  people  of  the  West  by  the  clause 
in  the  C.  P.  R.  contract  which  exempts  the  lands  granted  to  the  C.  P.  R. 
from  taxation.  This  exemption  was  supposed  to  extend  for  20  years, 
but,  through  the  carelessness  of  the  people's  representatives  and  the 
cleverness  of  C.  P.  R.  lawyers,  it  is  still  effective  though  the  contract 
was  made  32  years  ago.  The  result  is  that  in  many  rural  municipalities 
and  school  districts  there  is  very  little  land  which  can  be  assessed  for 
taxes.  The  lack  of  schools  and  roads  in  such  districts  can  easily  be 
understood.  In  such  districts  either  the  few  farmers  whose  land  is 
assessable  must  be  excessively  taxed,  or  schools  and  roads  must  be  done 
without.  This  condition  is  seen  at  its  worst  in  the  C.  P.  R.  irrigation 
district,  in  Alberta,  where  the  railway  company  secured  both  odd  and 
even  numbered  sections.  Lands  owned  by  the  C.  P.  R.  or  held  by 
others  under  agreement  of  sale  are  not  liable  for  taxes.  Those  which 
have  been  patented  to  purchasers  are  liable,  but  there  is  such  a  small 
area  taxable  that  in  the  school  districts  of  Irricana,  Crowfoot  and 
Goderich  it  has  been  found  impossible  to  support  the  schools.  Goderich 
and  Crowfoot  schools  have  consequently  been  closed,  while  at  Irricana 
the  school  is  being  maintained  by  private  subscriptions.  The  C.  P.  R.  in 
the  year  ending  on  June  30  last,  made  a  profit  of  over  $46,000,000. 
Nevertheless,  the  children  of  farmers  living  on  the  prairies  of 
Saskatchewan  and  Alberta  are  deprived  of  even  a  common  school  edu- 
cation because  the  C.  P.  R.  through  a  legal  quibble  has  escaped  the 
obligation  of  paying  taxes.  ..." 


274  PROGRESS  OF  RAILWAY  LORDS 

selling  to  themselves  as  heads  of  the  Canadian  Pacific  various 
small  railways  which  they  either  individually  owned  or  ef- 
fectively controlled. 

The  Grand  Trunk  Railway  Company  had  extended  its  pos- 
sessions by  amalgamating  in  its  system  various  lines  such  as 
the  Great  Western  Railway,  and  later  it  absorbed  the  North- 
ern Railway  and  the  Hamilton  and  North  Western  Railway 
with  which  it  had  previously  —  in  1879  —  arranged  a  pooling 
agreement.  The  Midland  Railway  of  Canada  passed  into  its 
possession ;  this  line  was  an  amalgamation  of  the  Toronto  and 
Nipissing  Railway,  the  Whitby,  Port  Perry  and  Lindsay  Rail- 
way, the  Toronto  and  Ottawa  Railway  and  two  other  railways 
with  the  Midland  Railway.  After  a  series  of  financial  diffi- 
culties and  strikes,  in  which  its  workers  demanded  long-due 
arrears  of  pay,  the  Midland  Railway  Company  settled  with  its 
creditors  for  22  cents  on  the  dollar,13  and  passed  into  the  con- 
trol of  George  A.  Cox,  an  insurance  agent,  who  had  been 
quietly  buying  its  stock.  Following  the  amalgamation  with 
the  five  other  railways,  Cox,  in  1881,  became  president  of  the 
Midland  Railway  of  Canada,  the  455  miles  and  $11,600,000 
stock  and  bonds  of  which  soon  were  acquired  by  the  Grand 
Trunk.14  It  was  greatly  by  reason  of  this  transaction  that 
Cox  became  a  millionaire,  enabling  him  to  expand  later  into 
so  notable  a  capitalist  with  a  variety  of  large  financial  and  in- 
dustrial interests.  The  Grand  Trunk  Railway  had  fused 
other  railways  —  the  Grey  and  Bruce,  the  St.  Lawrence  and 
Ottawa,  the  Vermont  Central  and  others.  The  great  com- 
petitor of  the  Grand  Trunk  —  the  Canadian  Pacific  —  now  be- 
gan the  same  process  of  amalgamation  of  small  lines. 

George  Stephen,  Edmund  B.  Osier  and  various  associates 
had  early  begun  to  get  control  of  different  railways.  In  1881 

13  Monetary  Times,  February  22,  1878,  pp.  995-996. 

^Ibid.,  1881.  Robert  Jaffray,  another  noted  capitalist  and  a  close 
partner  of  Cox  in  subsequent  transactions,  was  associated  with  Cox  in 
this  amalgamation. 


PROGRESS   OF   RAILWAY   LORDS  275 

Osier  was  president  of  the  Ontario  and  Quebec  Railway,  and 
George  Stephen  was  one  of  the  directors.  George  Stephen 
and  Donald  A.  Smith  were  also  directors  of  the  Atlantic  and 
North  Western  Railway  Company,  and  Osier  was  vice  presi- 
dent of  the  Toronto,  Grey  and  Bruce  Railway.  In  turn,  these 
railways  often  absorbed  other  railways.  The  Atlantic  and 
Western  Railway,  after  becoming  a  branch  of  the  Canadian 
Pacific,  absorbed  the  Waterloo  and  Magog  Railway  the  di- 
rectors of  which  did  not  care  to  have  the  threat  made  by  the 
Atlantic  and  Northeastern  Railway  of  building  a  parallel  line 
carried  out.15  Methods  such  as  these  were  invariably  effect- 
ive. 

To  the  forefront  now  came  Donald  A.  Smith.  Hill,  Ken- 
nedy and  Mclntyre  withdrew  from  the  Canadian  Pacific's 
board  of  directors  in  1883,  and  Smith  became  a  director. 
From  thence  for  decades  he  was  the  most  powerful  figure  in 
the  executive  committee  of  that  railway  company.  George 
Stephen  long  remained  president  of  the  company,  and  subse- 
quently Edmund  B.  Osier  was  elected  a  director. 

Ask  for  $45,000,000  More  Public  Aid. 

Only  three  years  after  they  had  obtained  the  money  sub- 
sidy of  $25,000,000  and  the  land  grant  of  25,000,000  acres  for 
the  main  line,  George  Stephen  and  his  Canadian  Pacific  Rail- 
way Syndicate  had  a  Bill  introduced  in  Parliament,  in  1884, 
to  give  them  sums,  in  the  form  of  loans,  totaling  nearly  $45,- 
000,000  more.  These  amounts  they  asked  on  the  ground  that 
they  were  essential  to  the  completion  of  the  railway. 

Lively  scenes  in  the  House  of  Commons  followed  the  push- 
ing of  this  Bill.  The  fight  really  developed  into  a  contest 
between  the  Canadian  Pacific  Railway  forces  and  those  of  the 

15  Monetary  Times,  July  23,  1886,  p.  oo.  The  Atlantic  and  Western 
Railway  ran  from  Smith's  Falls  to  Lachine. 


276  PROGRESS   OF   RAILWAY   LORDS 

Grand  Trunk  Railway.  M.  M.  Fleming  accused  the  directors 
composing  the  Canadian  Pacific  Syndicate  of  buying  up,  in 
their  private  capacity,  the  shares  and  bonds  of  the  Credit 
Valley  Railway  (running  from  Toronto  to  St.  Thomas)  at 
30  and  35  cents  on  the  dollar,  and  then  arranging  with  their 
own  company  to  value  them  at  100  cents  on  the  dollar.16 
Yet,  he  said,  the  Credit  Valley  Railway  had  received  $1,000,- 
ooo  in  bonuses  from  Ontario  municipalities  for  the  specific 
purpose  of  providing  competition.  Mr.  Fleming  went  on  to 
say  that  the  members  of  the  Canadian  Pacific  Syndicate  were 
absorbing  for  their  private  interests  all  of  the  feeders  of  the 
Grand  Trunk  that  they  could  possibly  secure. 

Mr.  Fleming  further  stated  that  of  the  $65,000,000  of  stock 
issued  by  the  Canadian  Pacific  Railway,  $25,000,000  of  it 
went  into  the  hands  of  the  original  members  of  the  syndicate, 
part  of  which  sum  they  took  as  payment  for  construction 
work  done  by  a  construction  company  composed  of  them- 
selves. Of  that  $25,000,000  of  stock,  $20,000,000  of  /it,  said 
Fleming,  was  taken  by  these  same  men  at  25  cents  on  the  dol- 
lar, with  the  resulting  profit  of  at  least  $9,000,000.  At  the 
time  that  they  got  the  contract,  Fleming  asserted,  they  sub- 
scribed only  $4,000,000 ;  now  they  claimed  to  have  spent  $23,- 
563,564  on  construction  work,  although  the  Minister  of 
Railways  placed  the  sum  thus  spent  at  $16,053,364. 

"  People  will  ask,"  continued  Fleming,  "  where  are  the 
enormous  sums  the  original  contractors  made?  Where  have 
these  gentlemen  put  these  enormous  profits  which  they  have 
made  out  of  this  transaction?  And  after  they  have  made 
such  great  profits  on  the  construction  of  the  railway,  why  do 
they  not  advance  out  of  their  enormous  fortunes  sufficient 
to  carry  on  the  contract  as  rapidly  as  possible?  " 17 

18  Debates,  House  of  Commons,  Dom.  of  Canada,  Session  1884,  Vol.  I, 
p.  318. 

17  Ibid.,  p.  320. 


PROGRESS   OF   RAILWAY    LORDS  277 

$10,000,000  Profit  From  Construction 

Mr.  Lister  declared  that  he  believed  that  the  Government 
was  "  in  the  palm  of  the  hand  of  the  managers  of  that  Com- 
pany." Mr.  Orton  and  others  speaking  in  favor  of  the  Bill, 
asserted  that  because  of  the  intrigues  and  influence  of  the 
Grand  Trunk  Railway  Company  in  England,  the  Canadian 
Pacific  had  been  unable  to  float  a  loan ;  therefore  the  Govern- 
ment should  come  to  its  aid.18  Mr.  Cameron  said  he  believed 
that  the  Canadian  Pacific  Syndicate  made  $10,000,000  from 
their  North  American  Construction  Company,  by  means  of 
which  Company  they  had  been  able  to  contract  with  them- 
selves, yet  other  sections  of  the  railway  were  still  to  be  com- 
pleted.19 Mr.  Rykert  denounced  the  opponents  of  the  Bill, 
and  declared  that  many  of  those  members  of  the  House  that 
he  named  were  beneficiaries  of  large  colonization  land-grant 
companies  in  the  North  West.20  Among  others  that  Rykert 
attacked  was  Mr.  Jaffray  of  the  Toronto  Globe,  which  attack, 
as  we  shall  see  in  a  later  chapter,  was  to  cost  Rykert  dear. 

Mr.  Charlton  asserted  that  the  Canadian  Pacific  Syndicate 
had  received  $54,247,000  cash  receipts  from  various  sources ; 
he  declared  that  George  Stephen  and  partners  had  watered 
the  Company's  stock  and  had  organized  a  construction  com- 
pany to  build  the  road ;  their  manipulations,  he  said,  were  not 
honest.  He  then  traced  Stephen's  antecedents,  and  described 
the  St.  Paul  and  Pacific  Railway  and  the  Bank  of  Montreal 
transactions,  and  said  there  were  "  rings  within  rings." 

18  Ibid.,  p.  344,  etc.    This  was  by  no  means  a  new  charge.    In  1877 
the  Grand  Trunk  Railway  Company  was  accused  of  having  ruined  the 
credit  of  the  North   Shore   Railway   Company  in   England  and   thus 
preventing  it  from   selling  bonds.     It  was  also  charged   with  having 
brought  about  the  rejection  by  the  rate  payers  of  Toronto  of  a  by- 
law granting  $300,000  aid  to  the  Toronto  and  Ottawa  Railway  which 
formed  the  western  continuation  of  the  North  Shore  Railway. —  See 
Monetary  Times,  December  28,  1877,  p.  755. 

19  Debates,  House  of  Commons,  etc.,  1884,  Vol.  I,  p.  359. 

p.  369. 


278  PROGRESS  OF   RAILWAY   LORDS 


An  Endless  Chain  of  Profits 

"  We  know,"  Charlton  went  on,  "  that  a  construction  com- 
pany was  formed  for  the  purpose  of  vastly  increasing  the  cost 
of  the  road,  and  putting  the  increased  cost  into  the  pockets 
of  a  ring  of  speculators.  We  know  that  the  stock  of  the 
Company  has  been  watered  most  scandalously,  and  that  the 
result  is  that  the  people  of  this  country  will  be  called  upon 
to  pay  10  per  cent,  in  perpetuity  upon  all  of  the  water  injected 
into  that  stock/'21  Mr.  Gillmor  drew  attention  to  the  fact 
that  Canada's  population  was  only  4,000,000;  the  working- 
men,  said  he,  would  have  to  pay  the  bill.  Mr.  Blake  declared 
that  it  was  well  known  that  the  Canadian  Pacific  Railway 
"  have  thus  far  engaged  in  the  construction  of  the  least  costly 
and  most  remunerative  portions  of  their  line;  that  the  more 
costly  and  difficult  and  less  profitable  portions  remain  to  be 
constructed ;  and  that  it  is  to  enable  them  to  construct  the  lat- 
ter that  they  are  now  making  application  to  Parliament  for 
aid."  22 

21  Ibid.,  p.  391.    That  these  strictures  were  not  idle  talk  is  evidenced 
by  the  agrarian  complaints  and  grievances  now  being  made  in  western 
Canada.    A  recent  editorial  in  the  Grain  Growers'  Guide  presented  this 
view : 

"  Certain  Eastern  newspapers  and  politicians  are  very  fond  of  talking 
about  the  debt  which  the  West  owes  to  the  East  for  its  self-sacrifice 
in  bearing  the  whole  cost  of  building  the  C.  P.  R.  into  this  country.  As 
a  matter  of  fact,  however,  anyone  who  knows  anything  about  Western 
conditions  knows  that  the  West  is  every  day  paying  very  dearly  for  the 
C.  P.  R.  and  for  the  bad  bargain  which  Eastern  politicians  made  to  se- 
cure the  construction  of  that  road.  The  25,000,000  acres  of  land  which 
the  C.  P.  R.  got  in  the  original  contract  were  all  Western  lands,  and 
many  a  Western  farmer  will  have  to  hand  over  half  the  proceeds  of  his 
crop  this  fall  as  an  instalment  on  the  purchase  of  some  of  the  land 
that  was  thus  given  away  by  the  Government.  Everybody  knows,  of 
course,  that  the  Government  has  always  allowed  the  C.  P.  R.  to  charge 
the  people  of  the  West  from  66  to  100  per  cent,  higher  rates  for  the 
carriage  of  freight  and  express  parcels  than  it  charges  in  the  East  for 
the  same  service." 

22  Debates,  House  of  Commons,  etc.,  1884,  Vol.  I,  p.  378. 


PROGRESS  OF  RAILWAY  LORDS  279 


Free  Railroad  Passes 

A  seething,  truculent  debate  that  was,  each  side  taunting  the 
other,  and  neither  seriously  denying  the  charges  that  each 
made.  It  could  not  be  denied  that  members  of  both  political 
parties  were  interested  as  promoters  or  stockholders  in  vari- 
ous railway  charters  and  subsidies,  and  in  colonization  land 
companies,  timber  limits,  coal  lands,  and  contracts  of  different 
kinds  all  of  which  they  had  obtained,  or  were  now  securing, 
by  means  of  their  Parliamentary  power  and  of  Government 
concession.  As  to  these  ramifications  of  personal  interests  on 
the  part  of  a  considerable  number  of  members  of  Parliament, 
pertinent  details  are  set  forth  in  the  chapter  following  this. 

Members  of  Parliament  all,  or  nearly  all,  accepted  free  rail- 
road passes.  In  a  debate  in  the  House  of  Commons  subse- 
quently, Lister  asserted  that,  "  As  a  matter  of  fact  a  very 
large  number  of  the  members  of  this  House  hold  passes  from 
the  railway  companies,"  and  Mr.  Amyot  held  that  "  free 
passes  should  be  granted  to  all  [members]  so  as  not  to  be  the 
means  of  corruption  when  Bills  concerning  certain  railways 
come  before  the  House.  It  is  no  use  trying  to  deceive  the 
public,  for  all  the  members  are  glad  to  have  free  passes.  We 
do  not  go  into  politics  in  this  Country  because  we  are  rich. 
We  know  very  well  that  some  members  have  given  votes  with 
reluctance  —  I  do  not  say  this  year  —  because  of  the  free 
passes  which  they  had  received  or  which  were  offered  to 
them."  23 

An  Alleged  $100,000  Fund 

It  was  almost  at  the  very  time  that  the  Canadian  Pacific 
Loan  Aid  Bill  was  before  the  House  of  Commons  that  certain 

~3 Debates,  House  of  Commons,  Dom.  of  Can,',  Session  1888,  Vol.  II, 
p.  1422. 


28O  PROGRESS   OF   RAILWAY   LORDS 

allegations  were  forthcoming  as  to  how  the  votes  of  certain 
members  were  secured  in  advance. 

We  have  already  traced  the  inception  of  the  North  Shore 
Railway,  and  narrated  how  it  was  alleged  that  the  Grand 
Trunk  Railway  Company  had,  by  ruining  its  credit  in  Eng- 
land, prevented  the  sale  of  its  bonds.  The  Government  of 
Quebec  then  came  to  the  assistance  of  the  North  Shore  Rail- 
way Company  to  which  was  given  subsidies  aggregating  $13,- 
000,000.  Financial  troubles  caused  its  sale  in  1882  for 
$8,000,000  to  a  syndicate  headed  by  M.  L.  N.  Senecal,  who, 
at  an  enormous  profit,  sold  it  to  the  Grand  Trunk.  It  was 
charged  that  Senecal  gave  to  Sir  Hector  Langevin  $100,000 
together  with  other  sums  which  were  alleged  to  have  been 
expended  in  favor  of  Conservative  candidates  for  election  to 
the  House  of  Commons,  in  1882.  The  circumstances  of  the 
sale  of  the  North  Shore  Railway  caused  such  a  scandal  that 
the  Government  of  the  Province  of  Quebec  appointed  Judge 
Routhier  to  investigate ;  he,  however,  announced  that  he  would 
not  inquire  into  the  matter  of  the  alleged  $100,000  fund,  as 
that  inquiry  would  be  beyond  his  jurisdiction.24 

Stephen  and  Partners  Get  Nearly  $45,000,000  Loan 

The  Bill  to  give  the  Canadian  Pacific  Railway  Company  an 
additional  loan  became  a  law;  under  this  Bill,  passed  by  the 
Dominion  Parliament  in  1884,  that  Company  received  a  total  of 
$44,880,912.  So  much  money  was  the  Company  gathering 
in,  that  within  two  years  it  was  able  to  pay  back  $29,880,912 
of  this  loan. 

As  we  have  noted,  the  foremost  argument  used  in  granting 
the  Canadian  Pacific  Railway  contract  and  charter  was  that 
subsidies  and  a  guarantee  of  monopoly  were  necessary  to  in- 
duce capitalists  to  invest  money  in  "  so  vast  and  hazardous 

2*  Monetary  Times,  Oct.  2,  1885,  p.  376. 


PROGRESS   OF   RAILWAY    LORDS  28 1 

an  enterprise,"  and  "  thus  promote  colonization  and  settle- 
ment." A  resolution  introduced  in  the  Manitoba  Legislature, 
in  1888,  was  full  of  wrath.  It  denounced  the  Canadian  Pa- 
cific's monopoly.  That  monopoly  and  the  ensuing  extortions, 
it  said,  were  the  cause  of  the  prevailing  stagnation  in  business, 
and  the  despondency  and  discontent  among  the  people.  The 
monopoly,  the  resolution  read  further,  "prevents  many  com- 
ing in  the  country  which  they  know  to  be  at  the  mercy  of  one 
corporation,  and  is  causing  many  good  citizens  to  leave  it."  25 

Agitation  was  now  carried  on  to  get  the  Canadian  Pacific 
to  relinquish  its  monopoly  —  an  agitation  that  was  no  doubt 
partly  stimulated  and  accelerated  by  promoters  of  other  pro- 
jected railway  lines. 

An  incident  developed  at  this  juncture  when  Premier  Green- 
way  and  Attorney-General  Martin  of  Manitoba  went  to  Ot- 
tawa. Sir  George  Stephen  voluntarily  informed  Greenway 
personally  that  no  proposition  having  any  reference  to  their 
errand  had  been  made  by  the  Canadian  Government  or  by  the 
Canadian  Pacific  Railway  Company.  Greenway  wrote  that 
he  (Greenway)  "  was  at  a  loss  to  understand  such  a  state- 
ment, especially  when  being  informed  by  the  Right  Hon.  the 
Premier,  immediately  subsequent  to  the  statement  made  by 
Sir  George  Stephen,  that  the  Government  of  Canada  had  met 
the  President  of  the  Canadian  Pacific  Railway  Company 
[Stephen]  and  that  the  matter  was  progressing  favorably."  26 
v 

A  Gift  of  $15,000,000  More 

As  a  "  solatium  "  for  its  supposed  relinquishment  of  a  mo- 
nopoly, which,  according  to  Premier  Greenway,  never  had  any 
foundation  so  far  as  the  old  Province  of  Manitoba  was  con- 

25  Journals,  Legislative  Assembly  of  Manitoba,  and  Sess.  Papers  i  to 
32,  Vol.  XVIII,  1887. 

26  ibid.,  1888,  Vol.  XIX,  Sess.  Paper  No.  4. 


282  PROGRESS   OF   RAILWAY   LORDS 

cerned,  the  Canadian  Pacific  Railway  Company  received  a 
guarantee  from  the  Dominion  Government  of  $15,000,000  in 
bonds.  But  the  very  next  year  a  motion  in  the  Manitoba  Leg- 
islature complained  that  despite  this  settlement,  the  Canadian 
Pacific  was  continuing  resistance  to  the  construction  of  com- 
peting railways  in  Manitoba,27  and  nine  years  later  another 
motion  denounced  the  Canadian  Pacific's  elevator  monopoly 
by  which  the  grain  product  was  controlled.  This  resolution 
was,  however,  amended  so  as  to  omit  all  reference  to  the  Ca- 
nadian Pacific  Railway.28 

By  this  time  the  Canadian  Pacific  Railway  Company  had 
received  in  Government  assistance  $18,720,000  more,  so  that, 
not  counting  the  enormous  value  of  its  land  grant  esti- 
mated at  hundreds  of  millions  of  dollars,  it  had  obtained  more 
than  $206,000,000  in  Government  aid.  This  $206,000,000  in- 
cluded $65,000,000  of  its  capital  stock  guaranteed.  Of  its 
land  grant,  it  relinquished  6,793,014  acres  in  consideration  of 
the  payment  of  $10,189,521.  This  direct  aid  of  more  than 
$206,000,000  in  the  form  of  Government  cash  subsidies,  guar- 
antees, loans  and  bonds,  was,  however,  only  a  part  of  what 
the  Canadian  Pacific,  or  lines  which  it  acquired,  eventually 
received.  More  subsidies,  land  grants  and  hugely  valuable 
coal  mines  all  rapidly  came  into  its  proprietary  possession. 

27  Ibid.,  1889,  Vol.  XXI,  p.  18  of  Journals. 
**lbid.,  1898,  Vol.  XXX,  p.  30. 


CHAPTER  XV 
EXTENSION  OF  RAILWAY  POSSESSIONS 

Immense  as  was  the  ramification  of  the  properties  already 
controlled  and  largely  owned  by  Donald  A.  Smith,  George 
Stephen  and  the  remainder  of  the  Canadian  Pacific  Railway 
group,  their  possessions  were  hugely  augmented  by  the  acqui- 
sition, either  by  purchase  or  lease,  of  other  railways  char- 
tered during  this  period  and  endowed  with  great  land 
grants  and  extensive  money  subsidies. 

*  s 

A  Donation  of  1,399,000  Acres 

The  Manitoba  South  Western  Colonization  Railway  was 
one  of  these.  By  an  Order-in-Council,  the  Dominion  Govern- 
ment, in  1880,  made  a  gift  to  this  railway  of  1,328,000  acres 
of  valuable  land.  Computing  this  land  as  then  worth  at  least 
$10,000,000,  Edward  Blake,  in  the  Dominion  House  of  Com- 
mons prodded  Premier  Macdonald  about  the  transaction  and 
denounced  it.1  The  gift  stood,  and  Manitoba  added  a  loan 
of  $900,000.  The  Manitoba  South  Western  Colonization 
Railway  ultimately  received  a  total  of  1,399,640  acres,  and 
later  passed  under  lease  to  the  Canadian  Pacific  Railway  Com- 
pany. 

Large  Land  Grant  to  the  North  West  Central 

Another  of  the  richly-subsidized  railways  subsequently 
passing  into  the  control  of  the  Canadian  Pacific  group  was  the 
Great  North  West  Central  Railway.  This  was  a  line  char- 

of  Common,  Dom.  Parl,  Session  1880-1881,  Vol.  I, 


pp.  112-113. 


284  EXTENSION  OF  RAILWAY  POSSESSIONS 

tered  in  1882  as  the  Souris  and  Rocky  Mountain  Railway; 
the  Company  made  some  appearance  of  constructing  the  road 
but  evidently  none  to  pay  its  workers;  various  remonstrative 
petitions  went  in  to  Parliament  from  its  laborers  asserting 
that  they  had  not  been  paid  for  a  whole  year's  labor.  The 
principal  promoter  of  the  charter  of  this  railway  was  a  mem- 
ber of  the  House  of  Commons  who,  it  was  openly  charged  (as 
we  shall  see),  had  received  a  gratuity  of  $386,000  of  Souris 
and  Rocky  Mountain  Railway  stock. 

The  successor  of  the  Souris  and  Rocky  Mountain  Railway 
Company  was  the  North  West  Central  Railway  Company  em- 
powered to  take  over  the  line  and  construct  a  railway  of  about 
450  miles  from  Brandon  to  Battleford,  in  the  Province  of 
Saskatchewan.  The  Company  had  originally  been  allowed 
the  privilege  of  purchasing  land  at  the  rate  of  $1.06  an  acre  to 
the  extent  of  6,400  acres  for  each  mile  of  the  railway.  This 
was  considered  a  rich  enough  gift.  But  the  promoters  did 
not  see  why  they  should  pay  anything  when  they  could  con- 
trive to  get  the  land  as  a  gift. 

They  managed  their  plans  with  such  success  that,  on  July 
29,  1885,  an  Order-in-Council  was  issued  permitting  them  to 
take  the  land  as  a  free  grant,  conditional  upon  the  railway 
being  built. 

Still,  the  railway  line  remained  on  paper,  which  was  as  far 
as  most  of  its  construction  went.  An  amendment  to  the  origi- 
nal Act  was  now,  in  1886,  introduced  by  James  Beaty,  mem- 
ber for  West  Toronto,  in  Parliament  sanctioning  the  giving 
of  the  land  grant  as  a  vested  right  to  that  company  or  any 
other  company  that  might  construct  the  road. 

Charges  of  Corruption 

Suddenly,  certain  interested  members  of  the  House  of  Com- 
mons were  much  perturbed  over  definite  charges  leaking  into 


EXTENSION   OF   RAILWAY   POSSESSIONS  285 

the  newspapers  that  corruption  had  accompanied  the  gliding 
course  of  legislation  dealing  with  the  North  West  Central 
Railway  Bill  of  1884. 

Members  of  Parliament  were  constrained  to  bestir  them- 
selves to  attempt  explanations.  No  languor  marked  this  day's 
proceedings. 

D.  B.  Woodworth,  a  member  from  Nova  Scotia,  admitted 
that  he  had  introduced  and  promoted  the  Bill  of  1884.  "  I 
was  not  aware,  Sir,"  he  said  with  naive  candor,  "  nor  am  I 
yet  aware  but  that  it  was  the  general  custom  of  members  of 
Parliament  to  be  interested  in  railway  charters  if  they  pleased, 
just  as  if  they  were  not  members  of  Parliament;  and  believ- 
ing that,  I  went  into  this  matter  the  same  as  though  I  were 
not  a  member  of  Parliament." 2 

Amplifying  his  statement,  Woodworth  averred  that  he  had 
promoted  the  Bill  at  the  instigation  of  Beaty.  He  wrote  a 
letter  to  Beaty,  he  said,  agreeing  with  Beaty  "  that  after  $50,- 
ooo  —  if  the  road  could  be  made  to  pay  that  —  was  divided 
among  the  directors,  whatever  franchises  were  left,  we  were 
mutually  to  be  interested  in."  Woodworth  said  that  Beaty 
never  replied  to  this  letter.  Later  Beaty  (so  explained  Wood- 
worth),  had  a  Bill  drawn  up,  amending  the  original  charter. 
"  I  looked  at  the  Bill,"  Woodworth  continued,  "  and  found 
that  all  the  guards,  all  the  checks,  ensuring  payment  to  the 
workmen  upon  the  road  —  the  old  Souris  and  Rocky  Moun- 
tain Railway,  of  which  this  was  a  revival  —  had  been  left 
out."  In  the  Railway  Committee  Woodworth  objected  to  the 
Bill  —  so  he  now  stated  —  and  the  Committee  struck  out  the 
objectionable  clauses.  He  and  Beaty  then  and  there 
quarreled.  Notwithstanding  Beaty's  denial,  Woodworth  in- 
sisted that  he  and  Beaty  were  jointly  interested  in  the  rail- 
way.8 

2  Debates,  House  of  Commons,  etc.,  Session,  1886,  Vol.  II,  p.  974. 

3  Ibid.,  p.  975. 


286  EXTENSION   OF  RAILWAY   POSSESSIONS 

A  Demand  for  $6751000 

The  members  of  the  House  were  still  more  keenly  inter- 
ested when  Woodworth  went  on :  "I  stated  to  the  [Railway] 
Committee  that  I  had  a  letter  that  the  member  for  West  To- 
ronto [Beaty]  had  demanded  as  his  share  of  the  profit  in 
building  that  road  from  a  contractor  whom  he  wished  to 
undertake  the  work,  the  modest  sum  of  $675,000.  I  read  that 
letter.  At  a  subsequent  meeting  I  read  a  letter  from  another 
man,  whose  name  I  forget  now,  saying  that  he  heard  the  mem- 
ber for  West  Toronto  demand  that  as  the  modest  sum  for 
what  he  called  '  the  boy/ 

"  There  was  not  an  honest  attempt  to  build  one  foot  of  this 
road,"  Woodworth  continued.  "  There  was  not  an  honest 
attempt  to  put  a  theodolite  on  the  road,  to  take  a  measure- 
ment, to  take  a  level ;  to  do  anything,  to  go  out  there  even,  as 
I  understand,  to  put  a  foot  on  the  road,  but  merely  to  hawk 
[the  charter  of]  the  road.  ...  I  say  this  was  a  charter  selling 
and  nothing  else."  Woodworth  then  submitted  a  copy  of  an 
agreement  signed  by  James  Beaty,  as  president  of  the  North 
West  Central  Railway  Company,  to  award  a  contract  to  build 
a  part  of  the  railway.* 

Influences  at  Work  in  Parliament 

Mr.  Mitchell,  a  member  of  the  House  Railway  Committee, 
then  said  that  although  the  foregoing  facts  were  brought  out 
before  the  Committee  "  there  were  some  influences  "  which 
prevented  a  forfeiture  of  the  charter  and  which  granted  an  ex- 
tension of  time  to  the  railway's  promoters.5  Edward  Blake 
arose  and  said  that  the  North  West  Central  Railway  Company 
was  "converted  largely  into  a  directorate  of  politicians  and 
members  of  Parliament."6 

*Ibid.,  p.  976.  *Ibid.,  p.  979.  *Ibid. 


EXTENSION   OF   RAILWAY   POSSESSIONS  287 

Beaty  now  had  his  say.  He  denied  any  specific  arrange- 
ment with  Woodworth,  and  asserted  that  he  had  got  in  touch 
with  American  capitalists  who  wanted  to  build  the  road. 


One  Member  Gets  $386,000  in  Stock 

Severe  denunciation  of  the  whole  scheme  then  came  from 
John  Charlton,  another  member  of  the  House  of  Commons. 
He  said  that  "it  was  an  astonishing  fact  that  the  Govern- 
ment of  Canada,  after  all  of  the  revelations  that  have  been 
made  in  regard  to  the  transaction  now  under  the  considera- 
tion of  the  House,  should  insist  upon  granting  this  charter. 
.  .  .  We  have  in  this  case  a  member  of  this  House  in  the  pos- 
session of  $386,000  worth  of  capital  stock  which  he  admits 
.  .  .  has  not  cost  him  a  cent.  .  .  . 

"  Now,  we  have  a  statute  which  imposes  a  fine  of  $2,000  on 
every  member  of  the  House  for  every  day  he  sits  in  the  House 
while  he  has  a  contract  with  the  Government."  Charlton 
further  declared  that  a  "  system  of  contract  brokerage  was 
going  on,"  and  said  that  the  member  who  got  the  $386,000  of 
capital  stock  did  it  for  the  purpose  of  controlling  the  com- 
pany, "  and  putting  into  his  pocket  all  of  the  bonuses  granted 
and  gain  made  out  of  it."  7 

More  caustic  and  specific  was  Hon.  J.  F.  Lister's  denuncia- 
tion. "...  We  find,"  he  said,  "  the  honorable  member  for 
West  Toronto  and  his  friends  on  the  directorate  are  not  rail- 
way builders  at  all.  Most  of  them,  I  believe,  are  lawyers 
practicing  in  the  City  of  Toronto.  They  never  did  anything 
about  railways.  ...  It  is  a  monstrous  thing  that  members  of 
Parliament,  sitting  here  representing  the  people,  are  permitted 
to  traffic  in  railway  charters.  It  is  a  scandal,  a  burning  dis- 
grace." 

"*  Ibid.,  p.  982. 


288  EXTENSION   OF   RAILWAY   POSSESSIONS 


An  Alleged  $100,000  for  a  Minister 

Lister  then  read  affidavits  made  by  D.  McConachie  of  Ham- 
ilton, and  E.  A.  C.  Pew  of  Welland.  McConachie  deposed 
that  in  September,  1885,  he  saw  Beaty  for  the  purpose  of 
negotiating  for  the  contract  to  build  the  North  West  Central 
Railway,  and  proposed  to  deposit  the  sum  of  $125,000  in  the 
Canadian  Bank  of  Commerce.  Beaty, —  so  McConachie  at- 
tested,—  repeated  the  expression,  "  But  you  see  there  is  noth- 
ing in  it  for  the  boy."  The  affidavit  stated  further  that  Beaty 
said  that  Hon.  Thomas  White,  Minister  of  the  Interior,  was 
his  friend,  "  and  that  it  would  be  desirable  to  give  the  Hon. 
Thomas  White,  the  Minister  of  the  Interior,  the  sum  of  $100,- 
ooo.  .  .  .  And  said  James  Beaty  justified  said  payment  to 
the  honorable  Minister  of  the  Interior  upon  the  grounds  that 
said  Minister  had  renewed  the  land  grants  in  the  matter  volun- 
tarily and  without  waiting  for  Parliament  to  meet." 

The  affidavit  further  stated  that  Beaty  additionally  declared 
during  this  interview  that  after  the  payment  of  the  $100,000 
to  White,  and  after  other  members  of  the  House  of  Commons 
associated  with  Beaty  were  "  shared  with,"  his  (Beaty's)  por- 
tion of  the  $675,000  would  be  small,  "  considering  his  personal 
time  given  and  means  spent  in  furthering  the  project."  8 

Pew's  affidavit  made  similar  statements,  particularly  as  re- 
garded Beaty's  declaration  that  it  would  be  desirable  to  give 
$100,000  to  Minister  of  the  Interior  White.9 

A  Day  of  Recrimination 

Defending  himself,  White  asserted  that  the  character  of  the 
men  making  these  affidavits  was  such  that  their  statements 

8  Debates,  House  of  Commons,  Dom.  Parl,  Session  1886,  Vol.  II,  pp. 
995  and  1709. 
» Ibid. 


EXTENSION   OF   RAILWAY   POSSESSIONS  289 

were  not  to  be  taken  seriously.  White  said  that  Pew  was  well 
known  by  his  association  with  the  Manitoba  and  South  West- 
ern Railway  and  his  conduct  in  connection  with  that  project, 
revelations  as  to  which  had  been  made  in  the  courts;  he  was 
not  a  man,  White  alleged,  whose  statement  could  be  depended 
upon.10 

The  debate  at  this  point  became  exceedingly  bitter,  members 
of  the  House  interjecting  derogatory,  sharp  remarks,  and  some 
of  them  seeking  to  divert  attention  from  the  charges  made 
against  them  by  making  charges  against  other  members.  "  I 
know,"  said  White,  at  one  stage  of  the  proceedings,  "that 
presidents  of  important  railway  corporations  in  England  have 
announced  the  opinions  they  had  from  counsel  in  Canada, 
members  of  Parliament,  and  even  declared  the  amount, —  $2,- 
ooo, —  which  they  paid  for  the  opinion."  " 

The  satirical  Dr.  George  Landerkin,  called  "  the  Wit  of  the 
House,"  here  projected  himself  into  the  acrimonious  debate. 
He  specified  four  members  of  the  House  of  Commons  who 
were  associated  with  Beaty  in  railroad  projects  in  Manitoba. 
"  Well,"  he  commented,  "  it  is  a  gratifying  thing  to  the  people 
of  Manitoba  to  find  that  there  are  such  benevolent  members 
in  this  House  who  are  prepared  to  sacrifice  their  comforts  to 
construct  railways  for  the  people  of  Manitoba,  and  who  re- 
ceive 6,400  acres  of  land  per  mile,  when  the  construction  of  it, 
perhaps,  is  not  worth  more  than  640." 


Long  List  of  Parliamentary  Railway  Promoters 

Citing  from  the  Parliamentary  Companion,  Landerkin  said 
that  Mackenzie  Bowell,  member  for  North  Hastings  and  Do- 
minion' Minister  of  Customs,  was  president  of  the  North 
Hastings  Railway  which  received  a  Dominion  Government 
subsidy  of  $10,500.  Mr.  Bowell  rose  to  explain,  saying  that 
p.  995.  11  Ibid.,  p.  997. 


290  EXTENSION   OF   RAILWAY   POSSESSIONS 

he  had  been  president  of  the  Belleville  and  North  Hastings 
Railway  before  it  had  passed  into  the  hands  of  the  Grand 
Trunk  Railway.  Bowell  asserted  that  the  Grand  Trunk  Rail- 
way Company  did  not  accept  the  subsidy  money.12 

Reading  further  from  the  Parliamentary  Companion,  Lan- 
derkin  said  that  Mr.  Bryson,  member  of  the  House  for  Pon- 
tiac,  was  a  director  of  the  Pontiac  and  Pacific  Junction 
Railway.  Bryson  later  denied  this,  but  Landerkin  replied 
that  he  was  quoting  the  Parliamentary  Companion,  which  con- 
tained autobiographies  presumably  written  by  the  members 
of  the  House  themselves.  But  Bryson  did  not  deny  Mr. 
Lister's  statement  subsequently  that  he  (Bryson)  was  a  stock- 
holder in  the  Long  Sault  Railway,  bonused  to  the  extent  of 
$25,600,  nor  did  he  deny  that  he  was  interested  in  the  Gati- 
neau  Railway.13 

Landerkin  further  declared  that  Mr.  Wood,  member  of  the 
House  for  Westmoreland,  was  president  of  the  Caraquet  Rail- 
way, which  received  a  Government  subsidy  of  $76,800  in  a 
single  year.14  Wood  did  not  deny  this  statement.  "  I  see," 
Landerkin  dryly  went  on,  "  that  the  Secretary  of  State,  the 
member  for  Terrebonne,  is  also  director  of  a  railway,  and  I 
presume  that  he  will  look  after  the  interests  of  that  railway/' 
"  He  is  getting  a  pretty  good  slice  of  it,"  added  Mr.  Mitchell, 
another  House  member.15 

As  Landerkin  went  on  to  make  statement  after  statement 
it  became  increasingly  evident  to  the  other  House  members 
that  he  had  his  facts  well  in  hand. 

12  Debates,  House  of  Commons,  etc.,  Session  1886,  Vol.  II,  pp.  990^ 
1000.    Both  Landerkin  and  Bowell  later  became  associated  with  cap- 
italist   enterprises ;    Landerkin    as    president    of    the    Canada    Mutual 
Mining   and   Developing   Company,   and   Bowell   as   president   of   the 
Hasting  Loan  and  Investment  Company. 

13  Ibid.,  p.  1061. 

**  Ibid.,  p.  999.    For   further  details  as  to  the  scandals  relating  to 
this   project   see   later  in   this  work. 
^Ibid.,  p.  999. 


EXTENSION  OF  RAILWAY   POSSESSIONS  29 1 


The  Roll  Call  Proceeds 

Proceeding  with  his  bill  of  particulars,  Landerkin  said  that 
Mr.  Colby,  member  of  the  House  of  Commons  for  Stanstead, 
was  a  director  of  the  Massawippi  Railway ;  Colby  did  not  deny 
the  statement.16  Landerkin  declared  that  R.  N.  Hall,  mem- 
ber of  the  House  for  Sherbrooke,  was  president  of  the  Mas- 
sawippi Railway,  and  a  director  of  the  Quebec  Central  Railway 
which  extracted  $211,200  from  Parliament  in  1884;  Hall 
made  no  denial.17  Of  Mr.  Hay,  member  of  the  House  for 
Center  Toronto,  Landerkin  said  that  he  was  a  director  of  the 
Credit  Valley  Railway.  "  Ten  years  ago,"  ejaculated  Hay.18 

Still  reading  from  the  Parliamentary  Companion,  Lander- 
kin  said  that  Mr.  Ives,  member  of  the  House  for  Richmond 
and  Wolfe,  and  son-in-law  of  John  Henry  Pope,  Minister 
of  Railways,  was  a  director  of  the  International  Railway 
which  in  a  single  year  had  received  $170,000  of  Government 
subsidies.  Ives  admitted  that  he  was  a  solicitor  for  that  rail- 
way, but  denied  any  further  interest.19  Another  member  of 
the  House,  Landerkin  stated,  was  a  director  of  the  Kingston 
and  Pembroke  Railway  which  received  a  Government  subsidy 
of  $48,000;  this  particular  member  of  Parliament  was  the 
representative  of  Frontenac.20 

16  Ibid.,  p.   1000.    This  railway  ran  from  Magog  to  Coaticook;  the 
Government  of  Quebec  contributed  a  subsidy  of  $80,000. 

17  Ibid.    The  Quebec  Central  Railway  received  in  bonuses  a  total  of 
$533,301.30   from   the   Dominion    Government,   $1,076,123.14   from   the 
Quebec  Government,  and  $103,000  from  municipalities.    Part  of  it  was 
originally  chartered  as  the  Levis  and  Kennebec  Railway. 

18  Ibid.    The  Credit  Valley  Railway  received  a  bonus  of  $531,000  from 
the  Government  of  Ontario,  and  $1,085,000  bonuses  from  municipalities. 

19  Debates,  House  of  Commons,  etc.,  Session  1886,  Vol.  II,  p.  1077. 

wlbid.,  p.  looo.  But  the  $48,000  subsidy  from  the  Dominion  Gov- 
ernment was  only  a  part  of  the  total  received  by  the  Kingston  and 
Pembroke  Railway;  the  Province  of  Ontario  gave  it  a  bonus  of 
$456,493,  and  municipalities  gave  it  the  sum  of  $509,320.  This  railway, 
104  miles  long,  affiliated  for  some  time  with  the  Canadian  Pacific 
Railway,  is  now  leased  and  operated  by  the  Canadian  Pacific. 


292  EXTENSION   OF   RAILWAY   POSSESSIONS 

Continuing,  Landerkin  said  that  Mr.  Mackintosh,  member 
of  the  House  for  Ottawa,  was  president  of  the  Ottawa  Colon- 
ization Company,  and  of  the  Gatineau  Railway,  which  latter, 
Landerkin  said,  received  $320,000  Government  subsidy. 
Mackintosh  denied  that  he  had  ever  got  a  dollar.  "  It  may  all 
be  spent  by  this  time,"  retorted  Landerkin  breezily.21  Lan- 
derkin doubtless  here  referred  to  the  Ottawa  Valley  and 
Gatineau  Railway,  which  railway  company  received  $319,982 
Quebec  Government  subsidy. 

The  Minister  of  Railways,  Too 

"  I  come  now,"  went  on  Landerkin,  "  to  the  honorable  mem- 
ber for  Compton,  the  Minister  of  Railways  [John  Henry 
Pope].  He  is  president  of  the  International  Railway,  which 
runs  from  Montreal  through  the  State  of  Maine."  This  rail- 
way company  had  received  a  total  in  15  years  of  $2,250,000 
in  Government  subsidies.22 

Landerkin  proceeded  to  state  that  Mr.  Wallace,  member  for 
West  York,  was  president  of  the  York  Farmers'  Colonization 
Company,  and  that  Mr.  White,  member  of  the  House  for 
North  Renfrew,  was  a  director  of  the  Pontiac  and  Pacific 
Junction  Railway  which,  Landerkin  said,  secured  $272,000  in 
Government  subsidy.  "  He  is  pretty  solid,"  commented 
Landerkin  descriptively,  "  and  when  the  division  bell  rings 
he  is  on  hand." 23 

"An  Empire  Bartered  Away" 

Next  day  came  more  revelations  of  how  members  of  Par- 
liament and  their  associates  obtained  from  the  Government 
gifts  of  railway  charters  and  subsidies,  great  pasture  land 

21  Debates.  House  of  Commons,  Session,  1886,  VoL  II,  p.  1000. 

22  Ibid. 
™  Ibid. 


EXTENSION   OF   RAILWAY   POSSESSIONS  293 

leases  at  one  cent  an  acre,  valuable  coal  land  leases,  coloniza- 
tion grants  of  vast  areas  of  public  land  at  half  price,  and 
extensive  timber  limits. 

"  Members  of  Parliament,"  said  Charlton,  "  brothers  of 
members  of  Parliament,  nephews  of  members  of  Parliament 
—  the  faithful  and  deserving  of  every  kind,  every  station  and 
every  degree,  have  been  the  recipients  of  these  favors  at  the 
hands  of  Government ;  and  hundreds,  I  had  almost  said  thou- 
sands of  limits,  have  been  granted  to  the  faithful  without 
competition.  In  secret  an  empire  has  been  bartered  away." 
Charlton  described  these  elements  as  "  plunderers  gathered  to 
the  prey."24 

More  Hon.  Members  Placed 

Aggressively  J.  F.  Lister  arose  with  his  bill  of  particulars. 
He  said  that  Dalton  McCarthy,  member  for  North  Simcoe, 
was  one  of  the  incorporators  of  the  Northern  and  Pacific 
Junction  Railway  Company;  that  with  McCarthy  were  asso- 
ciated Senator  Frank  Smith  and  Senator  James  Turner  upon 
the  list  of  shareholders  of  that  Company.  "  They  appear  to 
hold  1,820  out  of  2,000  shares.  It  is  reported  that  they  will 
make  at  least  $500,000  out  of  a  railway  which  is  heavily  sub- 
sidized by  the  Government."  25  These  facts  were  not  denied 
by  any  of  those  named. 

"  I  find,"  Lister  went  on,  "  that  the  International  Railway 
Company  has  upon  its  stock  list  the  Hon.  E.  T.  Brooks,  the 
Hon.  John  Henry  Pope,  Minister  of  Railways,  the  Hon.  M. 
H.  Cochrane,  and  my  honorable  friend  Mr.  Ives.  These 
gentlemen  are  the  stockholders  of  this  road.  I  find  that 
another  road,  bonused  to  a  very  considerable  extent,  and  in 
which  Mr.  Pope  is  interested,  received  at  one  time  $175,000 
of  the  people's  money.  ...  I  find  that  the  road  [railway]  has 

^Debates,  House  of  Commons,  etc.,  1886,  Vol.  II,  p.  1032. 
25  Ibid.,  p.  1060. 


294  EXTENSION   OF   RAILWAY   POSSESSIONS 

been  further  bonused  to  the  extent  of  $2,550,000  for  the  con- 
struction of  a  road  from  Montreal  to  the  road  in  which  Mr. 
Pope  is  interested,  and  will  form  a  link  of  the  new  road.  I 
say  it  is  a  disgrace  to  the  country  that  a  Minister  of  Railways, 
owning  the  International  Road,  which  he  had  owned  for  nine 
or  ten  years,  which  this  country  owed  nothing  to,  should  come 
to  this  House  and  ask  this  Parliament  to  give  him  the  enormous 
sum  of  $146,000  for  placing  iron  upon  the  road  owned  by 
him  and  built  years  before,  and  which  there  was  no  reason  in 
the  wide  world  for  assisting  by  bonus  or  anything  else.  .  .  ."  26 

"  I  go  further,"  said  Lister,  "  and  I  find  that  the  Pontiac 
and  Pacific  Junction  Railway  from  Aylmer  to  Pembroke  was 
bonused  to  the  extent  of  $270,000.  This  road  is  owned  by 
the  Secretary  of  State.  He  is  a  stockholder  and  the  real 
owner  of  the  road,  and  it  is  owned  by  Senator  Ogilvie  and 
the  honorable  member  for  North  Renfrew  (Mr.  White). 
These  are  the  stockholders  in  the  road.  Does  anyone  tell 
me  that,  under  these  circumstances,  it  is  a  small  thing  for  three 
honorable  members  of  this  House,  one  of  them  a  Minister  of 
the  Crown,  to  come  to  Parliament  and  ask  this  Parliament  to 
give  them  $270,000?  It  is  a  monstrous  and  disgraceful  thing 
that  any  member  of  Parliament  should  be  a  corporator  in  a 
railway  seeking  aid  from  this  Government.  .  .  ." 27 

These  were  exceedingly  strong  and  specific  statements  to 
make  with  such  positiveness  but  they  were  allowed  to  pass 
unchallenged,  no  one  venturing  to  question  any  part  of  them 
or  to  dispute  the  accuracy  of  the  whole. 

26  Ibid.,  p.  1060.    We  have  previously  noted  that  John  Henry  Pope 
was  one  of  the  original  promoters  of  the  Eastern  Townships  Bank, 
chartered  in  1853,  the  St.  Francis  Valley  and  Kennebec  Railway  char- 
tered in  1869,  and  of  the  Waterloo  and  Magog  Railway  which  last 
named  line  was  sold  to  the  Canadian  Pacific  Railway  in   1886.     See 
further  particulars  as  to  Pope  in  the  next  chapter. 

27  Debates,  House  of  Commons,  etc.,  1886,  p.  1060.    The  Government 
of  the  Province  of  Quebec  voted  the  Pontiac  and  Pacific  Junction  Rail- 
way Company  $600,000  in  subsidies,  of  which  $426,000  had  been  paid 
by  1911  on  the  construction  of  71  of  the  projected  95  miles. 


EXTENSION   OF   RAILWAY   POSSESSIONS  295 

Further  List  of  Parliamentary  Stockholders. 

In  monotonous  succession,  Lister  proceeded  to  detail  the 
connection  of  various  other  members  of  Parliament  with  rail- 
way projects  and  lines. 

Mr.  Mackintosh,  Mr.  Bryson  and  Mr.  Alonzo  Wright  were 
the  stockholders  of  the  Gatineau  Railway  which  had  received 
a  Government  bonus  of  $160,000. 

The  Hon.  J.  A.  Chapleau  (Dominion  Secretary  of  State), 
J.  J.  C.  Abbott,  and  Joseph  Tasse,  member  for  Ottawa,  were 
the  incorporators  of  the  Montreal  and  Western  Railway  which 
had  ^secured  a  Government  bonus  of  $160,000.  This  railway 
was  an  88-mile  affair  and  was  later  bought  by  the  Canadian 
Pacific  Railway  Company. 

Lister  went  on  to  point  out  that  Mr.  Temple,  member  for 
York  was  "  deeply  interested  "  in  the  Miramachi  Railway  to 
which  was  voted  a  Government  bonus  of  $128,000;  Temple 
denied  this,  but  Lister  said  he  had  such  facts  as  satisfied  him. 

Mr.  Landry,  member  for  Kent,  was,  Lister  stated,  a  stock- 
holder in  the  St.  Louis  and  Richibucto  Railway,  which  fact 
Landry  did  not  deny. 

Mr.  Burns,  member  for  Gloucester,  was  deep  in  the  Cara- 
quet  Railway,  a  charge  that  could  not  be  denied;  we  shall 
later  describe  the  scandal  developing  from  the  operations  of 
this  particular  railway's  projectors. 

Mr.  Bergin,  member  for  Cornwall,  and  Mr.  White,  member 
for  Renfrew,  were  stockholders  in  the  Ontario  and  Pacific 
Railway  which,  Lister  said,  had  obtained  a  Government  bonus 
of  $262,400.  Not  denied. 

White,  Tasse,  and  Mackintosh  were  stockholders  in  the  Ot- 
tawa, Waddington  and  Northern  Transportation  Company 
which  received  a  Government  bonus  of  $166,000  voted  by  Par- 
liament in  1885.  Not  denied. 

Mr.  Wood,  member  for  Westmoreland,  represented  the  New 


296  EXTENSION   OF  RAILWAY   POSSESSIONS 

Brunswick  and  Prince  Edward  Island  Railway,  the  recipient 
of  a  Government  bonus  of  $113,400,  which  connection  was  not 
denied.  This  railway  also  received  $99,708.90  from  the  New 
Brunswick  Government. 

Mr.  Montplaisir,  member  for  Champlain,  did  not  deny  the 
charge  that  he  was  a  stockholder  in  the  Montreal  and  Cham- 
plain  Railway,  which,  Lister  said,  had  obtained  a  Government 
bonus  of  $300,000. 

One  after  another  Lister  continued  to  detail  the  railway 
connections  and  interests  of  still  other  members  of  Parlia- 
ment.28 

The  Bill  Goes  Through. 

All  of  these  exposures,  however,  were  futile.  Parliament 
made  the  land  grant  to  the  North  West  Central  Railway  Com- 
pany. Three  years  later,  its  successor,  the  Great  North  West 
Central  Railway  Company  was  incorporated  by  an  Order-in- 
Council,  and  on  the  same  day  —  July  22,  1889  —  another  Or- 
der-in-Council  gave  the  land  grant  of  320,000  acres  to  this 
company.  The  condition  was  that  the  entire  line  was  to  be 
built  by  1892,  but  further  Orders-in-Council,  in  1889  and  1891, 
extended  the  time.  Not  until  December,  1891,  were  the  first 
50  miles  of  the  railway  completed.29  The  total  mileage  by 
1911  was  only  112  miles. 

The  ownership  of  the  stock  of  the  Great  North  West 
Central  Railway  was  acquired  by  the  Canadian  Pacific  group 
in  1898,  and  is  now  a  part,  by  perpetual  lease,  of  the  Canadian 
Pacific  Railway.  The  Great  North  West  Central  land  grant 
has  been  of  great  value;  of  the  original  grant  of  320,000 
acres,  about  220,000  acres  were  sold  by  1911,  and  the  remain- 
ing 100,000  acres  were  held  at  the  average  price  of  $18.73 

28  Lister's  full  remarks  on  the  subject  appear  in  Debates,  House  of 
Commons,  etc.,  1886,  Vol.  II,  pp.  1060-1077. 

29  Sessional  Paper  No.  9,  1892,  pp.  Ixiv  and  Ixv,  Sessional  Papers, 
Dom.  Parl.,  Vol.  XXV,  1892. 


EXTENSION   OF   RAILWAY   POSSESSIONS  2Q7 

an  acre  —  a  total  price  for  the  100,000  acres  of  nearly  $1,900,- 
ooo.  The  Great  North  West  Central  Railway,  with  its  ex- 
tensive land  grant,  was  indeed  a  fine  prize. 

Manitoba  and  North  Western  Railway  Gets  1,501,376  Acres 

At  about  the  same  period  that  the  North  West  Central  Rail- 
way was  chartered,  endowed  and  subsidized,  another  railway 
—  the  Manitoba  and  North  Western  —  was  chartered  with 
a  gift  of  a  land  grant  of  1,501,376  acres.  This  line  was  run 
from  Portage-la-Prarie  to  Lanigan. 

A  financial  arrangement  was  then  devised  to  get  the  cash 
to  construct  the  road.  The  promoters  prevailed  upon  the 
Manitoba  Government  to  advance  them  large  loans  of  funds 
upon  the  security  of  the  very  lands  that  had  been  granted  by 
the  Dominion  Government! 

By  an  agreement  of  November  15,  1885,  the  Manitoba  and 
North  Western  Railway  Company  bound  itself  to  pay  10 
cents  an  acre  survey  fees  on  the  lands  to  be  turned  over  to 
the  Manitoba  Government  as  security  for  the  issues  of  rail- 
road-aid Provincial  bonds.  Twelve  years  later  the  Manitoba 
officials,  we  find,  reported  that  up  to  that  date  the  railway 
Company  had  paid  nothing  under  this  agreement.30  In  1899, 
many  serious  scandals  developed  as  to  the  management  of 
Manitoba's  provincial  finances,  especially  in  regard  to  the  ways 
in  which  railway  companies  obtained  public  funds. 

The  Procuring  of  Public  Funds 

A  Royal  Commission  was  appointed  to  do  some  investigat- 
ing. 

This  Commission  reported  that  frequently  "  railway  deben- 

30  Journals,  Legislative  Assembly  of  Manitoba,  1897,  Vol.  XXXIX, 
Sessional  Paper  No.  10,  p.  35. 


298  EXTENSION   OF  RAILWAY   POSSESSIONS 

tures  for  large  amounts  were  guaranteed  and  handed  over  to 
agents  of  the  contractors  without  the  authority  of  an  Order- 
in-Council." 

It  appeared  from"  the  report  of  this  Commission  that  the 
Government  of  the  Province  of  Manitoba  had  loaned  Provin- 
cial bonds  to  the  value  of  $787,426.67  to  the  Manitoba  and 
North  Western  Railway  Company,  the  Province  taking  as  se- 
curity one  acre  of  the  Company's  land  grant  for  each  dollar 
advanced,  the  Company  agreeing  to  pay  five  per  cent,  interest 
a  year.  From  year  to  year  the  company  defaulted  in  the  pay- 
ment of  interest  until  the  accumulated  arrears  amounted  to 
$366,439.07,  not  counting  the  compounding  of  interest.  The 
Manitoba  and  North  Western  Railway  Company  now  owed 
$1,158,784.34  to  the  Province,  for  which  debt  Manitoba  held 
as  security  702,560  acres  of  the  land  grant. 

Publicly  Paid  for  but  Privately  Owned 

These,  however,  were  not  the  only  funds  that  the  Manitoba 
and  North  Western  Railway  Company  obtained.  From  mu- 
nicipalities it  received  a  donation  of  $215,600. 

In  public  funds  it  had  therefore  obtained  $1,374,384.34. 
The  promoters  owned  the  railway,  but  the  money  invested  was 
public  money.  By  laws  passed  in  1900,  the  Province  of  Man- 
itoba relinquished  all  claims  upon  160,000  acres  of  the  702,560 
acres  of  the  Company's  land  grant  which  it  held  as  security, 
and  in  lieu  of  all  its  claims  for  principal  and  interest,  the 
Province  agreed  to  keep  542,560  acres  in  fee  simple.  This 
arrangement  left  the  Province  of  Manitoba  responsible  for 
the  payment  of  about  $39,500  interest  a  year  for  ten  years, 
and  the  principal  of  $787,426.67  due  in  I9io.31  The  case  now 
stood  thus: 

31  Report  of  Royal  Commission,  Journals  of  the  Legislative  Assembly 
of  Manitoba,  1900,  Vol.  XXXII,  Sess.  Paper  No.  21,  pp.  393-448. 


EXTENSION   OF   RAILWAY   POSSESSIONS  2QQ 

The  Dominion  Government  had  presented  the  Manitoba  and 
North  Western  Railway  Company  with  1,501,376  acres  of 
land. 

The  Company  had  then  obtained  $787,426.67  in  funds  from 
bonds  issued  by  the  Government  of  Manitoba,  the  Province 
taking  702,560  acres  of  the  land  grant  as  security. 

By  1900  the  Company  owed  the  Province  $1,158,784.34 
and  was  confronted  with  a  total  of  about  $395,000  interest  up 
to  1910  when  the  bonds  matured  —  a  full  total  of  more  than 

$1,553784-34. 

Meantime  the  Company  also  received  a  clear  gift  from 
municipalities  in  subsidies  of  $215,600. 

The  Government  of  the  Province  of  Manitoba  returned 
160,000  acres  of  land  to  the  Company,  and  in  exchange  for 
542,560  acres  assumed  the  full  debt,  principal  and  interest. 

The  Company,  therefore,  had  received  —  all  points  con- 
sidered—  a  total  of  more  than  $2,000,000  in  public  funds  to 
build  a  prairie  railroad  of  379  miles,  and  the  Company  was  still 
absolute  owner  of  958,816  acres  of  its  authorized  land  grant. 
Public  funds  built  the  railway,  and  legislative  authority  pre- 
sented it  to  a  clique  of  promoters,  who  now  owned  not  only 
the  railway  but  a  vast  area  of  valuable  land  besides.  The 
capitalization  of  the  road  was  gradually  run  up  to  $12,361,- 
967. 

The  lease  of  the  Manitoba  and  North  Western  Railway  was 
acquired  by  the  Canadian  Pacific  Railway. 

Protesting  against  the  granting  of  huge  railway  subsidies, 
A.  H.  Gillmor  said  in  the  Dominion  House  of  Commons,  on 
April  30,  1889,  that  "  it  has  come  to  be  the  case  now  that  no 
man  can  speak  of  economy  or  make  reference  to  the  taxpayers 
of  this  Dominion  without  being  considered  childish  or  imbecile 
to  give  a  thought  to  the  men  who  are  toiling  with  all  these 
burdens  on  their  backs." 32 

32  Debates,  House  of  Commons,  etc.,  1889,  Vol.  II,  pp.  1677-1678. 


300  EXTENSION   OF   RAILWAY   POSSESSIONS 

G.  E.  Casey,  another  member  of  the  House  of  Commons, 
summarized  the  situation  in  this  language:  ".  .  .  My  hon- 
orable friends  who  have  wasted  a  good  deal  of  time  argu- 
ing this  question,  seem  to  forget  that  the  gentlemen  who  sit 
opposite  are  merely  the  political  department  of  the  Canadian 
Pacific  Railway.  It  is  really  the  Canadian  Pacific  Railway 
which  governs.  This  is  a  conclusive  proof  that  these  honor- 
able gentlemen  are  mere  trustees  for  that  railway  of  the 
political  power  of  the  country,  as  other  gentlemen  may  be 
trustees  for  their  bonds  or  land  grant.  It  is  a  waste  of  time 
to  argue  with  them  as  to  whether  they  should  obey  the  orders 
of  their  masters  or  not.  They  must  carry  out  the  behests 
of  the  Company."  33 

»*Ibid.,  p.  1683. 


CHAPTER  XVI 

APPROPRIATION  OF  COAL,  TIMBER  AND 
OTHER  LANDS 

That  coal  deposits  lay  in  British  Columbia  had  been  long 
known,  and  near  Nanaimo  coal  had  been  mined  since  1852. 
But  it  was  not  until  Professor  Richardson  of  the  Dominion 
Geological  Survey  reported  on  the  enormous  extent  and  value 
of  the  coal  fields  radiating  about  200  square  miles  from 
Nanaimo,  that  a  certain  group  of  capitalists  decided  that  the 
time  was  ripe  to  transfer  the  ownership  of  a  considerable, 
if  not  all,  of  this  area  to  themselves. 

This  group  was  composed  of  Robert  Dunsmuir,  his  son, 
James  Dunsmuir,  of  Vancouver,  John  Bryden  and  three  mem- 
bers of  the  renowned  "  Pacific  Quartet,"  to  wit,  Charles 
Crocker,  Leland  Stanford  and  Collis  P.  Huntington  of  Cali- 
fornia. Robert  Dunsmuir  was  a  British  Columbia  capitalist 
and  politician,  becoming  a  leading  member  of  the  Government 
of  that  Province.  Crocker,  Stanford  and  Huntington  were 
the  three  chief  promoters  and  beneficiaries  of  the  Southern 
Pacific  and  other  railway  projects  in  the  United  States;  of 
the  extensive  bribery  there  that  accompanied  the  passage  of 
legislation  consummated  by  them,  we  have  already  given  some 
particulars.1 

Such  was  the  group  that  at  once  set  about  getting,  and  did 
get  from  the  Dominion  and  the  British  Columbia  governments 
laws  granting  a  charter  for  the  Esquimault  and  Nanaimo  Rail- 

1  And  many  more  examples  are  specifically  related  in  Vol.  Ill,  of  the 
History  of  the  Great  American  Fortunes. 

301 


3O2  APPROPRIATION    OF   COAL   AND   TIMBER   LANDS 

way  together  with  subsidies  of  1,900,000  acres  of  land,  and 
$750,000  cash.  These  donations  were  authorized  for  a  line 
of  only  78  miles,  running  from  Victoria  to  Wellington. 

This  happened  in  1884.  One  member  of  the  House  of  Com- 
mons, D.  W.  Gordon,  of  Vancouver,  demanded  of  Premier 
Sir  John  A.  Macdonald  certain  explanations.  Had  the  Gov- 
ernment published  advertisements  either  in  Canada  or  Great 
Britain  inviting  tenders  for  the  construction  of  the  Esquimault 
and  Nanaimo  Railway?  If  so,  had  the  attention  of  the  cap- 
italists been  called  to  the  area  of  land  subsidy  to  be  given,  or 
to  the  reported  value  of  the  coal  deposits  extending  from 
Nanaimo  to  Seymour's  Narrows?  And  why  had  the  system 
of  alternative  sections  in  aid  of  railways  been  departed  from 
in  the  contract  entered  into  by  the  Government  with  Messrs. 
Dunsmuir,  Huntington  and  associates? 

Premier  Macdonald  Explains 

Premier  John  A.  Macdonald  dismissed  the  questions  with 
this  brief  reply  which  we  give  literally : 

"  No  advertisement  has  been  published  by  the  Government 
or  any  department  thereof  inviting  tenders  for  construction 
of  the  Esquimault  and  Nanaimo  Railway.  We  are  not  aware 
whether  any  advertisements  were  published  by  the  British 
Columbia  Government,  under  the  authority  of  the  Legislature, 
or  otherwise,  for  this  purpose,  nor  whether  they  have  called 
the  attention  of  capitalists  to  the  quantity  of  land  to  be  given 
in  aid  of  said  railway."  2 

2  Debates,  House  of  Commons,  1884,  Vol.  I,  p.  85.  It  may  be  said 
here,  as  illustrating  Premier  Macdonald's  associations,  that  he  became 
president  of  the  Manufacturers'  Life  Assurance  Company,  a  fact 
which,  on  March  12,  1889,  led  Lister  to  say  in  the  House  of  Commons 
that  "  it  was  a  dangerous  precedent  that  the  First  Minister  of  the 
Government  should  allow  his  name  to  be  used  by  any  commercial  cor- 
poration." Macdonald  replied  that  the  board  of  directors  of  that 
Company  "  for  wealth,  respectability  and  standing  were  not  second  to 


APPROPRIATION    OF   COAL   AND   TIMBER    LANDS  303 

It  was  asserted  during  this  debate  that  so  far  as  the  coal 
lands  that  they  were  then  mining  were  concerned,  the  Duns- 
muir  family  had  received  Crown  grants  previous  to  the  grant- 
ing of  the  lands  to  the  Esquimault  and  Nanaimo  Railway. 

Certain  members  of  the  House  of  Commons  denounced  the 
whole  scheme  as  one  giving  to  a  small  clique  the  monopoly 
of  the  coal  deposits  of  Vancouver  Island.  But  opposition  was 
useless.  The  advocates  of  the  promoters  could  plead  long- 
established  precedent,  as  for  instance,  the  transfer  by  the  Nova 
Scotia  Government,  in  1868,  of  one  square  mile  calculated  to 
contain  10,000,000  tons  of  coal,  as  a  subsidy  to  the  Glasgow 
and  Cape  Breton  Coal  and  Railway  Company.  That  subsidy, 
however,  was  not  a  gift  in  perpetuity,  but  was  given  in  the 
form  of  a  78-year  lease,  the  Company  to  pay  the  Government 
of  Nova  Scotia  a  royalty  of  eight  cents  per  ton.  The  subsidy 
to  the  Esquimault  and  Nanaimo  Railway  Company  was  a  gift 
without  reservations. 

The  chief  Government  member  vouching  for  the  Esquimault 
and  Nanaimo  Railway  Bill  seems  to  have  been  Minister  of 
Railways  John  Henry  Pope  who,  as  we  have  seen,  had  been  a 
personal  beneficiary  of  railway  and  other  charters.  He  gave 
the  most  solemn  assurances  that  the  Bill  was  a  good  one.  It 
was  to  Pope  that  Mr.  Mitchell,  a  member  of  the  House  of 
Commons,  referred  a  few  years  later  "  as  the  brains  of  the 
Administration.  .  .  .  No  one  has  done  more  in  directing  the 
policy  of  the  country  —  I  will  not  even  except  the  Premier  — 
than  the  honorable  Minister  of  Railways.  There  are  few 
men  who  can  sit  here  with  a  solid  countenance,  and  answer  to 
all  attacks  and  questions  that  '  there  ain't  nothing  to  it '  better 
than  my  honorable  friend."  3 

those  of  any  Company  in  Canada ;  and  in  saying  this  I  do  not  include 
myself.     My  standing  is  political,  not  financial." — Debates,  House  of 
Commons,  etc.,  Session  1889,  Vol.  I,  p.  592. 
3  Debates,  House  of  Commons,  etc.,  Session  1888,  Vol.  II,  p.  1689. 


304  APPROPRIATION   OF   COAL   AND   TIMBER   LANDS 

Dunsmuir  &  Co.,  Are  Successful 

The  Esquimault  and  Nanaimo  Railway  Bill  was  shoved 
through  Parliament.  Two  years  later  —  in  April,  1886  —  dis- 
cussion over  its  great  gratuities  was  renewed  when  a  Bill  was 
introduced  in  Parliament  allowing  a  deviation  of  its  line. 

One  member  after  another  of  the  House  of  Commons 
poured  forth  vehement  remarks. 

E.  C.  Baker,  member  for  Victoria,  declared  that  the  Dtins- 
muirs  owned  three-fifths,  and  the  California  stockholders  two- 
fifths,  of  the  Esquimault  and  Nanaimo  Railway  Company's 
stock.  "  This,"  he  said  with  an  air  of  authority,  "  I  know 
from  Mr.  Dunsmuir  himself,  so  that  the  control  of  the  com- 
pany is  in  the  hands  of  Messrs.  Dunsmuir  and  Son  entirely." 
The  purpose  of  this  statement  was  to  give  assurance  that 
Canadian  capitalists  controlled  the  project.  Mr.  Gordon,  of 
Vancouver  Island,  said  he  opposed  the  original  Bill  because  it 
gave  an  immense  grant  of  coal  lands  on  Vancouver  Island  to 
a  monopoly.  Sir  Richard  Cartwright  expressed  the  same 
views.4 

John  Charlton  charged  that  the  Southern  Pacific  coterie  had 
reached  out  its  hands  to  plunder  British  Columbia ;  "  they  have 
secured  a  grant  of  $750,000  cash  from  the  Dominion  Govern- 
ment, and  exceedingly  valuable  land  grants  from  British  Co- 
lumbia, besides  the  control  of  almost  the  entire  coal  interest 
of  Vancouver  Island."  5 


Get  Lands  Worth  Hundreds  of  Millions 

The  matter  of  these  great  grants  to  the  Dunsmuirs  and  as- 
sociates rankled  long  in  the  minds  of  those  opposing  the  sub- 
sidy. When,  on  May  9,  1890,  a  debate  over  the  Souris  coal 

. 

*  Debates,  House  of  Commons,  etc.,  1886,  Vol.  I,  p.  517. 
5  Ibid. 


APPROPRIATION  OF  COAL  AND  TIMBER  LANDS          305 

fields  was  on  in  the  House  of  Commons,  Mr.  Mitchell  of  New 
Brunswick  and  other  members  of  Parliament  recurred  to -the 
subject.  Mitchell  estimated  that  the  territory  given  to  the  Duns- 
muirs  and  partners  was  worth  $100,000,000  or  $200,000,000. 

It  was  the  only  coal  mine  of  any  extent,  John  Charlton  said, 
on  the  Pacific  Coast  of  Canada.  "  It  is  a  disgrace,"  he  com- 
mented, "  that  such  a  contract  should  have  been  made.  Every 
man  regrets  it  today.  That  coal  mine  is  alone  worth 
hundreds  of  millions  of  dollars  —  its  value  no  man  can  cal- 
culate ;  and  it  is  a  disgrace  that  the  Dunsmuir  transaction  was 
passed  on  just  as  little  information  as  we  are  asked  to  pass 
these  votes  tonight."  6  On  July  30,  1891,  Charlton  styled  the 
grant  as  "  a  huge  job,  a  swindle  on  the  people,"  and  asserted 
that  Minister  of  Railways  John  Henry  Pope  had  sponsored 
the  original  Bill.7 

Again,  less  than  a  year  later,  Charlton,  in  the  House  of 
Commons,  made  another  caustic  denunciation.  The  Govern- 
ment, he  said,  was  engaged  in  the  business  of  promoting 
private  speculation.  He  intimated  strongly  that  in  the  great 
majority  of  cases  these  charters  and  subsidies  had  been  char- 
acterized by  graft  on  the  part  of  somebody  or  a  collection 
of  somebodys.  Already,  he  went  on,  42,000,000  acres  of  land 
in  Canada  had  been  granted.  He  denounced  the  giving  of  the 
coal  lands  on  Vancouver  Island  as  "  a  bold  swindle." 

"  There  was,"  he  said,  "  a  little  line  of  railway  —  I  passed 
over  it  since  —  along  the  sea  coast  from  Victoria  to  Nanaimo, 
a  distance  of  70  miles,  the  construction  of  which  was  scarcely 
necessary;  and  to  promote  the  construction  of  that  railway 
nearly  all  of  the  coal  lands  of  the  Island  of  Vancouver  were 

6  Debates,  House  of  Commons,  etc.,  Session  1890,  Vol.  II,  pp.  -4691- 
4692. 

7  Ibid.,  Session,  1891,  Vol.  II,  p.  3150.     When  the  original  Esquimault 
and  Nanaimo  Railway  Bill  was  introduced,  Charlton  stated,  Pope  said 
it  was  "  all  right,"  and  it  was  rushed  through.    We  have  already  given 
Pope's  record  as  a  railway  promoter. 


306  APPROPRIATION    OF   COAL   AND   TIMBER    LANDS 

granted  to  a  syndicate,  the  greater  proportion  of  the  capital 
being  held  in  San  Francisco  by  the  Southern  Pacific  Railway 
magnates.  I  pointed  out  this  fact  at  the  time  but  the  lobby 
influences  here,  the  backing  here,  were  too  strong;  the  grant 
was  made,  the  coal  lands  have  gone ;  and  the  other  day  we  were 
informed,  in  discussing  the  militia  estimates,  that  the  reason 
coal  was  so  high  when  purchased  in  Vancouver  Island,  was 
that  there  was  a  monopoly,  and  we  ourselves  created  that 
monopoly  by  the  grant  of  the  Nanaimo  Railway  Company."  8 

Employ  Chinese  Coolie  Labor 

At  the  time  that  the  Dunsmuirs  obtained  these  land  grants 
and  money  subsidies,  one  of  the  arguments  used  in  favor  of 
the  grants  was  that  the  development  of  the  mining  and  other 
resources  would  give  employment  to  labor.  Subsequently  it 
turned  out  that  the  labor  employed  was  largely  Chinese  coolie 
labor. 

Robert  Dunsmuir  admitted,  in  1885,  that  he  employed  from 
700  to  800  whites  and  Chinese  in  his  Wellington  coal  mines, 
and  that  the  Chinese  did  the  manual  work.9 

The  Chinese  laborers  existed  in  conditions  of  squalor,  and 
worked  for  half  or  nearly  half  the  wages  that  the  whites  did. 
Samuel  M.  Robins,  Superintendent  of  the  Vancouver  Coal 
Mining  and  Land  Company,  testified  that  during  the  strike  of 
the  white  workers,  "  we  accepted  the  Chinese  as  a  weapon  to 
settle  the  strike."  10  In  his  testimony,  David  William  Gordon, 
M.  P.  for  Vancouver,  described  how  the  Chinese  Companies 
had  the  coolies  under  their  control  by  a  system  of  semi-servi- 

8  Ibid.,  Session  1892,  Vol.  I,  pp.  2271-2272. 

*  Report  of  the  Royal  Commission  on  Chinese  Immigration,  1885, 
Dom.  Sessional  Papers,  Vol.  XVIII,  No.  2,  1885,  Sess.  Paper  No.  54  A, 
p.  127. 

10  Ibid. ,  p.  118.  White  laborers  received  about  $2  a  day  wages,  and 
Chinese  $i  to  $1.25  a  day. 


APPROPRIATION   OF   COAL   AND   TIMBER   LANDS  307 

tude.11     It  was  estimated  that  there  were  18,000  Chinese  la- 
borers then  in  British  Columbia. 

The  Knights  of  Labor,  L.  A.  No.  3017  of  Nanaimo,  handed 
in  to  the  Royal  Commission  a  memorial  declaring  that  the 
Chinese  laborer  was  without  ties  or  family,  and  "  was  able 
not  only  to  live  but  to  grow  rich  on  wages  far  below  the  lowest 
minimum  on  which  we  can  possibly  exist.  They  are  thus 
fitted  to  become  all  too  dangerous  competitors  in  the  labor 
market,  while  their  docile  servility,  the  natural  outcome  of 
centuries  of  grinding  poverty  and  humble  submission  to  a 
most  oppressive  system  of  government,  renders  them  doubly 
dangerous  as  the  willing  tools  whereby  grasping  and  tyran- 
nical employers  grind  down  all  labor  to  the  lowest  living 
point.  .  .  .  The  Chinese  live,  generally,  in  wretched  hovels, 
dark,  ill-ventilated,  filthy  and  unwholesome,  and  crowded  to- 
gether in  such  numbers  as  must  utterly  preclude  all  ideas  of 
comfort,  morality  or  even  decency.  ..." 

"A  Princely  Fortune  Accumulated" 

The  memorial  proceeded :  "  All  of  the  immensely  valu- 
able coal  mines  contained  within  the  vast  railway  reserve  have 
been  handed  over  to  one  company,  the  principal  shareholder 
in  which  commenced  but  a  few  years  ago  without  a  dollar. 
...  So  large  have  been  the  profits,  that  he  has  accumulated 
a  princely  fortune,  and  has  become  all  powerful  in  the  Prov- 
ince, his  influence  pervading  every  part  of  our  Provincial 
Government,  overshadowing  our  Provincial  legislature,  and 
threatening  its  very  existence."  12 

This  referred  to  Robert  Dunsmuir.  The  memorial  esti- 
mated that  at  Dunsmuir's  Wellington  Colleries  there  were 
about  450  Chinese  to  300  or  350  whites.  "  Of  the  former  quite 
a  number  are  still  employed  digging  coal  in  spite  of  Mr.  Duns- 

11 /£«*.,  p.  135.  12/Wrf.,  p.  157. 


308         APPROPRIATION  OF  COAL  AND  TIMBER  LANDS 

muir's  assurance  that  they  would  not  be  so  employed.  In  the 
other  colleries  only  one-fourth  the  total  number  employed  are 
Chinese."  13 

Appalling  tragedies  frequently  happened  in  the  mines,  caus- 
ing great  loss  of  life.  A  Labor  Meeting,  held  at  Harmony  Hall, 
Victoria,  B.  C.,  February  15,  1888,  called  upon  the  Govern- 
ment to  make  enquiries  "  to  prevent,  if  possible,  terrible  coal 
mining  accidents,  two  of  which  during  the  past  year  have 
startled  and  horrified  the  Province."  14 

It  was  also  resolved,  as  the  opinion  of  this  meeting,  that 
not  another  acre  of  public  land  should  henceforth  be  deeded 
to  railways  or  for  any  other  purpose  except  on  the  basis  of 
1 60  acres  to  each  actual  settler,  which  land,  however,  should 
not  be  alienated  forever  from  public  ownership.  Also  the 
national  ownership  of  railways,  telegraphs,  etc.,  was  de- 
manded, and  legislation  was  called  for  dealing  with  the  Chinese 
evil.  Manhood  suffrage  was  demanded  as  "  the  true  basis 
of  liberty,"  and  a  demand  made  that  the  profits  derived  from 
machinery  should  be  participated  in  by  employes ;  "  the  capital 
utilized  in  manufactories  should  never  receive  more  than  legal 
interest."  15 

Multimillionaires  and  Political  Rulers 

Rapidly  the  Dunsmuirs  bloomed  into  multimillionaires. 
James  Dunsmuir  succeeded  his  father  as  president  and  chief 

13  Ibid.,  p.  158.    A  part  of  the  Knights  of  Labor  memorial  was  a  sec- 
tion reading,  they  "  should  have  had  the  chance  at  least  of  becoming 
employers  of  labor,"  etc.,  etc. 

14  Report  of  the  Royal  Commission  on  the  Relations  of  Capital  and 
Labor,  1889,  P-  131  • 

15  Ibid.    Other  parts   of  these  resolutions  are   of   singular  interest. 
Labor  organizations  were  declared  to  be  the  direct  and  necessary  re- 
sult of  bad  land  laws  and  the  enormous  power  of  capital  uncontrolled 
by  the  Government ;  arbitration  was  held  to  be  "  the  only  reasonable 
mode  of  obtaining  justice"  in  strikes  which  "were  injurious";  that  if 
capital,  so  called,  was  driven  from  the  country  by  hostile  legislation,  it 
"  was  only  an  imaginary  loss,  as  it  is  a  mere  medium  of  exchange,  and 
can  easily  be  created  by  legislation." 


APPROPRIATION   OF   COAL   AND   TIMBER   LANDS  309 

stockholder  of  the  Union  and  the  Wellington  colliery  com- 
panies and  of  the  Esquimault  and  Nanaimo  Railway  Com- 
pany. In  1900,  he  became  Premier  of  British  Columbia,  and 
in  1906-1909,  Lieutenant-Governor  of  that  Province.  In  1908 
he  was  elected  a  director  of  the  Canadian  Pacific  Railway 
Company.  He  personally  owned,  it  was  then  reckoned,  40,000 
acres  of  the  most  valuable  land;  the  wealth  of  the  Dunsmuir 
family  has  been  placed  at  from  $30,000,000  to  $40,0x30,000. 
In  1910-1911  the  mines  operated  by  the  Wellington  Colliery 
Company  were  taken  over  by  a  new  combination,  the  Cana- 
dian Collieries  (Dunsmuir),  Limited,  headed  by  Sir  William 
Mackenzie  as  president,  and  with  a  capital  of  $15,000,000. 
These  mines  now  produce  nearly  800,000  tons  of  coal  a 
year. 

During  the  same  period  in  which  the  Nanaimo  coal  de- 
posits were  given  away,  a  vast  aggregation  of  other  resources 
were  presented  by  the  Dominion  Government  to  various  in- 
dividuals, many  of  whom  were  members  of  Parliament.  In 
1882  and  1886  resolutions  condemning  these  practices  were 
offered  in  the  Dominion  House  of  Commons.  These  resolu- 
tions were  defeated.  Although  it  was  well  known  in  the 
financial  and  political  world  that  many  members  of  Parliament 
were  promoters  of  various  coal,  land-colonization  and  timber 
land  companies,  it  was  not  until  1890  and  1891  that  many  of 
the  facts  were  brought  out  formally  in  Parliament. 

Rykert's  Land  Transaction 

In  1890  the  Toronto  Globe  exposed  the  land  activities  of 
John  C.  Rykert,  an  influential  member  of  the  Dominion  House 
of  Commons. 

According  to  the  published  correspondence,  Rykert  had 
used  his  "  extraordinary  influence  "  with  the  Department  of 
the  Interior  to  get  for  John  C.  Adams  the  Cypress  Hills  tim- 


3IO  APPROPRIATION    OF   COAL   AND  TIMBER   LANDS 

ber  limit  in  the  North  West  Territories,  Adams  paying  the 
Government  $500  in  full  for  the  grant.  The  grant  was  made 
to  Adams  by  an  Order-in-Council  on  April  17,  1882.  At 
about  the  same  time,  Adams  signed  an  agreement  in  which 
document  Adams,  without  the  slightest  circumlocution,  stated 
that  inasmuch  as  Rykert  had  secured  the  timber  grant  for  him, 
he  (Adams)  contracted  to  give  Rykert's  wife,  Nannie  Marie 
Rykert,  one-half  of  the  proceeds  of  the  grant. 

Later,  Adams  sold  the  timber  limit  to  Louis  Sands  of  Mich- 
igan for  $200,000;  and,  on  January  16,  1883,  Rykert  received 
$74,200  —  $35,000  in  cash  and  $39,200  in  notes  —  as  his  share 
of  the  purchase  money. 

But  the  Canadian  Pacific  Railway  Company  altered  its 
claims  of  survey,  and  claimed  the  Cypress  Hills  timber  limit 
as  lying  within  one  of  the  sections  of  its  land  grant.  A  hot 
contest  then  set  in  at  Ottawa ;  and  according  to  the  published 
letters  written  by  Adams  and  Rykert,  Hugh  J.  Macdonald, 
son  of  Premier  Sir  John  A.  Macdonald,  and  J.  Stewart  Tup- 
per,  son  of  Sir  Charles  Tupper  (Dominion  Minister  of  Rail- 
ways and  Canals  in  1879-1885),  represented  Adams  in  a 
legal  capacity.  Subsequently  the  Canadian  Pacific  Railway 
sold  its  claim  to  Sands  at  $2.25  an  acre. 

These  charges  came  before  the  House  of  Commons,  partic- 
ularly as  there  were  passages  in  Rykert's  letters  to  Adams 
calling  for  explanation  from  some  of  the  members.  One  of 
these  private  letters  read :  "  I  find  difficulties  surrounding 
us  in  every  way  in  reference  to  the  limit,  and  I  find  that  the 
Canadian  Pacific  Railway  have  certain  [Cabinet]  Ministers 
working  for  them.  I  am  afraid  it  will  cost  us  each  six  or 
seven  thousand  dollars  to  get  this  matter  made  right.  I  have 
five  or  six  at  work  for  me,  and  have  agreed  to  pay  them  well 
if  they  succeed.  .  .  ."  16  One  of  the  names  mentioned  in  these 
letters  was  that  of  Mackenzie  Bowell,  then  Dominion  Minister 

i«  Debates,  House  of  Commons,  etc.,  Session  1890,  Vol.  I,  p.  571. 


APPROPRIATION    OF   COAL   AND   TIMBER   LANDS  3!! 

of  Customs.  Bowell  denied  that  he  had  in  any  way  been  con- 
cerned. D.  McCarthy,  another  House  member  whose  name 
was  mentioned  in  the  correspondence,  denied  that  he  had  any 
interest,  directly  or  indirectly.  Sir  John  A.  Macdonald  ad- 
mitted that  his  son  and  Sir  Charles  Tupper's  son  were  the 
solicitors  employed  by  Adams,  but  said  that  he  believed  that 
his  son  was  acting  honestly.17 

On  March  10,  1890,  a  letter  from  Stewart  J.  Tupper  was 
read  in  the  House  of  Commons  making  a  denial  of  the  state- 
ment that  he  ever  acted  for  Rykert,  Adams  or  Sands  in  Ot- 
tawa. Hugh  J.  Macdonald  also  denied  that  he  had  ever 
received  a  dollar  from  Rykert,  Adams,  Sands  or  anyone  else 
excepting  his  share  of  the  legal  fee  of  $100  which  his  firm 
received.  When  these  denials  were  made,  Rykert  produced 
a  letter,  dated  February  21,  1890,  from  his  partner,  J.  H. 
Ingersoll,  who  went  to  Minneapolis  to  there  interview  J.  B. 
McArthur,  a  lawyer  whose  firm  represented  Sands.  This 
letter  read  in  part:  ".  .  .  He  [McArthur]  thinks  that  Mr. 
Stewart  Tupper  was  in  Ottawa  at  the  time,  but  remembers 
quite  well  that  Mr.  H.  J.  Macdonald  was  about  to  start  for 
Ottawa  in  reference  to  a  Bill  then  before  the  House  regard- 
ing the  Manitoba  and  North  Western  Railway  Company.  .  .  ." 
Rykert  insisted  that  he  was  correct  in  saying  that  young  Mac- 
donald and  Tupper  went  to  Ottawa. 

"A  Mountain  Range  of  Well-Developed  Rascality" 

In  introducing  a  motion  that  Rykert's  conduct  was  "  dis- 
creditable, corrupt  and  scandalous  "  Sir  Richard  Cartwright, 
in  the  debate  the  next  day,  said  that  he  was  not  disposed  to 
regard  Rykert  as  the  only  sinner.  "  Every  practical  man 
knows  perfectly  well,"  Cartwright  went  on,  "  that  in  most 
cases  of  the  kind  which  are  coming  before  us,  the  facts  are 

17  Ibid.,  p.  576. 


312  APPROPRIATION   OF   COAL   AND   TIMBER    LANDS 

apt,  as  a  rule,  to  be  exceedingly  well  covered.  It  is  probable 
that  in  not  one  case  in  ten,  or  one  case  in  fifty,  can  we  obtain 
full  and  complete  evidence  detailed,  as  it  is  here,  of  all  of  the 
ways  and  modes  by  which  members  of  Parliament  can  exer- 
cise their  influence  for  their  own  personal  gain.  ...  In  fact, 
Mr.  Speaker,  unless  the  thieves  fall  out,  unless  there  is  a  quarrel 
over  the  division  of  the  plunder,  unless  these  things  come  be- 
fore a  court  of  law  and  are  subjected  to  the  ruthless  cross- 
examination  of  counsel  of  both  sides,  it  is  the  rarest  thing 
in  the  world  to  obtain  absolute  and  complete  proof  such  as 
we  have  now  recorded  in  our  Votes  and  Proceedings.  Here 
such  an  accident  has  occurred.  Here  there  was  a  quarrel  over 
the  division  of  the  spoils."  Cartwright  concluded  by  saying 
that  Rykert  was  only  a  peak  but  there  was  "  a  mountain  range 
of  undiscovered,  but  well-developed  rascality."  18 

Rykert  got  up  and  made  sneering  references  to  Cartwright's 
remarks,  saying  that  it  was  Cartwright  who  had  charged  the 
Minister  of  Public  Works  with  having  received  presents  from 
contractors,  and  that  he  had  charged  John  Henry  Pope, 
formerly  Minister  of  Railways,  with  having  put  in  his  pocket 
$i66,ooo.19 

Industrious  Members  of  Parliament 

Denouncing  the  consecutive  giving  away  of  timber  limits, 
John  Charlton  added  to  the  debate.  He  said  that  25,300 
square  miles  covering  16,192,000  acres  in  the  North  West, 
had  been  granted  to  a  horde  of  about  550  camp  followers, 
not  one  or  20  of  whom  were  lumbermen  at  all.  "  I  found  [in 
1886]  on  examining  the  records  of  the  Department  of  the  In- 
terior, that  there  had  been  850  square  miles  of  timber  lands 
granted,  upon  the  personal  application  of  members  of  this 
House  and  the  Senate,  to  17  different  members  of  those  bod- 

18  Debates,  House  of  Commons,  etc.,  Session  1890,  Vol.  I,  p.  1718. 
p.   1738. 


APPROPRIATION    OF   COAL   AND   TIMBER    LANDS  313 

ies."  Here  Charlton  gave  the  list  of  names  of  these  mem- 
bers, and  also  a  list  of  members  that  had  secured  timber  lim- 
its for  their  relatives  or  friends.  Tisdale,  a  House  member, 
arose  and  accused  Charlton  of  himself  profiting  to  the  extent 
of  $100,000  from  a  timber  limit.  Charlton  replied  that  he 
had  bought  the  limit  at  a  private  sale  from  a  man  who  had 
bought  it  at  public  auction.20 

On  May  2,  1890,  Rykert  resigned  from  Parliament.21 
In  1891  another  resolution  condemning  the  practice  of  the 
Government  in  making  these  grants  was  introduced.  Speak- 
ing at  length  on  it,  Charlton  said  that  for  13  years  the  admin- 
istration of  the  Dominion  Government  "  had  been  character- 
ized by  favoritism,  nepotism,  jobbery,  waste  of  public 
resources,  corrupt  practices,  and  by  practices  calculated  to 
debase  and  debauch  Parliament  and  to  lower  the  moral  tone  of 
the  community."  His  arraignment  was  a  partisan  one,  but 
so  far  as  the  facts  he  gave  were  concerned,  they  contained  the 
truth. 

Predatory  Schemes  Described 

First,  Charlton  said,  there  was  the  colonization  scheme  by 
which  favored  applicants  received  from  the  Government  grants 
of  land  in  blocks  of  townships  at  one-half  the  price  at  which 
those  lands  were  sold  to  settlers.  "  These  grants  were  made 
upon  easy  terms  of  payment,  holding  out  to  the  speculator 
embarking  in  the  scheme  the  prospect  of  great  wealth  in  the 
securing  of  these  grants  under  the  colonization  plan  at  a 
nominal  price  of  $i  an  acre." 

There  was  another  scheme,  Charlton  related,  "  by  which 
speculators  were  enabled  to  secure  mineral  and  coal  land 
leases  at  a  mere  nominal  price  by  private  application." 

Also  there  was  the  pasture  land  abuse.  The  only  restric- 
tion in  this  case  was  that  each  pasture  land  grant  should  not 

*»Ibid.t  p.  1769.  ^Ibid.,  p.  4355. 


314         APPROPRIATION  OF  COAL  AND  TIMBER  LANDS 

exceed  50,000  acres.  The  Government  granted  leases  of  mil- 
lions of  acres,  at  one  cent  an  acre,  to  speculators,  "  far  in 
advance  of  the  wants  of  settlers." 

Still  further,  Charlton  went  on,  there  were  the  grants  of 
timber  lands ;  he  told  how  a  tract  of  nearly  100,000  square 
miles,  north  and  northwest  of  Lake  Superior,  was  in  dispute 
between  the  Government  of  Ontario  and  the  Dominion  of 
Canada;  and  how  the  Dominion  Government  proceeded  to 
parcel  a  very  large  portion  of  that  disputed  territory,  to  which 
it  had  no  title,  among  political  favorites.  "  We  now  know 
of  other  influences,22  Sir,  that  were  at  work  besides  these, 
and  we  can  understand  how  strong  was  the  position  in  which 
the  Government  intrenched  itself  through  contract  brokerage, 
through  pasture  land  leases,  through  coal  land  leases,  and 
through  all  these  plans  adopted  by  an  unscrupulous  Govern- 
ment to  strengthen  itself  and  to  secure  an  additional  support 
from  the  class  who  could  wield  an  influence  in  the  country.23 

How  the  Coal  Lands  Went 

"  Let  us,"  Charlton  specified,  "  first  take  up  the  subject  of 
coal  leases.  Up  to  February,  1883,  four  hundred  and  forty- 
nine  applications  had  been  received  for  coal  leases;  and  I 
shall  give  a  list  of  the  members  of  this  House  who  made 
private  applications  for  coal  leases  which  were  placed  in  the 
hands  of  the  Minister  of  the  Interior  and  acted  upon  by  him 
without  competition  being  invited.  These  leases,  when 
granted,  were  granted  to  those  parties  as  favors;  they  were 
corrupt  influences  which  gave  the  parties  an  unjust  advan- 
tage over  the  public  at  large."  Charlton  then  enumerated  the 
names  of  benefiting  members  of  Parliament,  and  continued: 

"  Thirteen  applications  by  men  who  were,  or  have  since 

22  This  reference  was  doubtless  to  the  Rykert  scandal. 

23  Debates,  House  of  Commons,  etc.,  Session,  1891,  Vol.  II,  p.  3430. 


APPROPRIATION  OF  COAL  AND  TIMBER  LANDS          315 

become  members  of  this  House.  There  were  also  two  appli- 
cations by  Sir  A.  T.  Gait  who  is  reaping  a  fortune  today  from 
the  coal  leases  granted  to  him,24  and  two  by  Hon.  John  Nor- 
quay  [sometime  Premier  of  Manitoba].  Here  were  13  mem- 
bers of  Parliament  placed  in  a  position,  through  favors  granted 
to  them  by  the  Government,  to  seriously  interfere  with  the 
independent  exercise  of  their  functions  as  members  of  this 
Hpuse."  25 

Land  Jobbing  Operations 

Charlton  then  dealt  with  the  colonization  grants  made  on 
easy  terms  of  payment  at  $i  an  acre,  and  gave  the  names  of 
23  members  of  Parliament  who  thus  benefited.  Among  them 
were  Robert  Hay,  M.  H.  Gault,  James  Beaty,  George  Guillet 
and  others  more  or  less  well  known.  "  A  total,"  Charlton 
summarized,  "  of  132  townships  applied  for  by  23  members 
of  Parliament ;  and  of  these  applications  at  least  20  were  spec- 
ulative, made  not  with  the  intention  of  settling  the  land,  but 
as  a  matter  of  speculation  with  the  view  of  selling  the  grant 
to  second  parties.26 

"  Then,"  Charlton  went  on,  "  we  come  to  the  pasture  leases 
under  which,  I  think,  over  2,000,000  acres  of  land  were  granted 
privately  and  without  competition  at  one  cent  an  acre  rental 
per  annum,  and  with  no  restriction  except  that  the  good  boy 
who  stood  in  with  the  Government  should  be  limited  to  50,000 
acres.  .  .  .  Not  in  one-seventh  of  these  cases  was  any  stock 
placed  on  the  ranches.27 

"  Then  we  come  to  the  most  important  feature  of  these 
abuses,  that  is,  the  granting  of  timber  limits.  Up  to  February, 

24  The  Gait  mines  were  at  Lethbridge,  Alberta.    Sir  A.  T.  Gait's  son, 
E.  T.  Gait,  first  was  manager,  in  1881-1890,  of  the  North  West  Coal 
and  Navigation  Company,  and  in  1890  became  managing  director  of  the 
Alberta  Railway  and  Coal  Company. 

25  Debates,  House  of  Commons,  etc.,  1891,  Vol.  II,  p.  3431. 

26  Ibid.,  p.  3431. 

.,  pp.  3431-3432. 


316  APPROPRIATION   OF   COAL   AND  TIMBER   LANDS 

1885 — returns  have  not  been  brought  down  to  a  later  period 
—  over  550  Orders-in-Council  had  been  granted  for  timber 
limits  of  50  square  miles  each,  covering  an  area  of  over  23,000 
square  miles  of  timber  territory ;  and  the  bonuses  received  [by 
the  Government]  for  them  were  practically  nil."  28 

Charlton  proceeded  to  give  a  long  list  of  names  of  members 
of  Parliament  applying  for  and  receiving  timber  limits  of  50 
square  miles  each  in  1884-1885.  Senator  A.  W.  Ogilvie  was 
one  of  these  members.20  "  Now,"  Charlton  enumerated, 
"  here  are  23  members  of  Parliament  —  either  then  or  now 
members  of  the  House  —  besides  three  ex-members,  William 
Elliott,  Oscar  Fulton  and  David  Blain  —  26  members  of  Par- 
liament in  all  who  have  received  timber  limits  from  this  Gov- 
ernment on  private  applications,  without  being  required  to 
compete  with  others,  and  paying  therefor  the  nominal  rental 
of  $5  per  square  mile."  The  Government,  Charlton  urged, 
should  have  advertised  those  timber  lands,  and  sold  them  at 
auction  to  the  highest  bidder,  "  but,  in  place  of  this,  these 
limits  were  placed  in  the  hands  of  these  members  of  Parlia- 
ment, not  one  of  whom  intended  to  develop  them,  but  only 
to  hold  them  for  speculation,  and  to  sell  them  afterwards  for 
large  bonuses  to  persons  who  wished  to  buy  them." 

In  addition  to  these  members  of  Parliament,  Charlton  said 
that  there  were  others  who  applied  unsuccessfully  for  limits 
which,  it  turned  out,  had^already  been  given  away.  Still  other 
members  secured  timber  grants  for  their  relatives  or  friends. 

Fifty-Seven  Busy  Legislators 

"  We  have  in  these  applications  made  by  members  of  this 
House  on  behalf  of  their  friends,"  Charlton  continued  with 

28  Debates,  House  of  Commons,  etc.,  Session  1891,  Vol.  II,  p.  3432. 

29  Ogilvie  lived  in  Montreal  and  was  the  head  of  grain  and  flour  mills. 
He  was  a  director  or  trustee  of  a  number  of  private  corporations,  and 
president  of  the  Western  Loan  and  Trust  Company. 


APPROPRIATION   OF   COAL   AND   TIMBER   LANDS  317 

vexatious  mathematical  precision,  "  a  total  of  79  applications 
presented  by  34  members  of  Parliament,  and  covering  3,900 
square  miles,  besides  a  total  of  1,150  miles  granted  to  mem- 
bers for  themselves,  making  a  grand  total  of  5,050  square 
miles  of  timber  limits  granted  to  members  of  Parliament  on 
their  applications,  and  we  have  57  members  applying  either 
for  themselves  or  friends." 

Most  of  these  grants,  Charlton  said,  had  been  hawked  about 
for  sale  just  as  railway  charters  had  been.  Among  the  list 
of  the  "  deserving "  who  secured  timber  grants,  Charlton 
specified,  were  Sir  A.  T.  Gait,  J.  H.  Beaty  of  Toronto,  A.  F. 
Drummond  of  Montreal,  O.  W.  Bailey,  son-in-law  of  the  late 
Minister  of  Railways  and  Canals,  and  scores  of  others.30 

A  virulent  debate  now  set  in. 

In  the  debate  the  fact  was  brought  out  that  Honore  Robil- 
lard,  member  of  the  House  of  Commons  for  Ottawa,  owned 
a  one-half  interest  in  a  79-mile  timber  limit  license  which  he 
had  been  instrumental  in  getting.  This  timber  grant  was  on 
the  Indian  Reserve;  the  Dominion  Government  had  sold  it 
to  Robillard  for  $316.  Of  this  sum  the  100  Indians  received 
31  cents  each!  Subsequently  the  firm  of  Francis  Brothers, 
to  whom  Robillard  sold  the  timber  grant,  gathered  in  $55,000 
cash,  and  that  silent  acquisitive  member  pocketed  $15,000  as 
his  share.  In  a  single  year  the  firm  of  Francis  Brothers  cut 
$8,250  of  timber,  and  after  two  years  of  lumbering  its  val- 
uable timber,  the  timber  limit  was  considered  of  such  value 
that  $60,000  was  paid  by  another  firm  for  what  remained 
of  it.31 

Another  member  of  the  House,  N.  C.  Wallace,  mentioned 
as  interested  in  land  companies,  dryly  retorted,  by  way  of  de- 
fense, that  "  when  I  first  went  into  the  colonization  business 
I  had  for  my  guide  the  honorable  member  for  East  York 

30  Debates,  House  of  Commons,  etc.,  Session  1891,  Vol.  II,  p.  3434. 

31  Ibid.,  pp.  3469  and  3478. 


318  APPROPRIATION   OF   COAL   AND   TIMBER   LANDS 

[former  Premier  Mackenzie],  who  was  among  the  first  to 
incorporate  a  company  for  colonization  purposes  in  the  North 
West,  of  which  he  was  a  member  and  president.  The  appli- 
cation was  made  on  the  loth  of  January,  1882.  Alexander 
Mackenzie  was  the  president,  and  one  of  the  five  promoters. 
Robert  Jaffray,  the  president  of  the  Globe  Company,  was  one 
of  the  other  promoters,  and  the  Company  was  called  the  Brit- 
ish Canadian  Colonization  Company,  Limited.  .  .  .  Our  char- 
ter, that  of  the  York  Farmer's  Colonization  Company,  was 
copied  exactly  from  the  charter  of  the  Company  incorporated 
by  the  Hon.  Alexander  Mackenzie,  the  present  member  for 
East  York  and  the  late  leader  of  the  Liberal  party  and  then 
a  member  of  the  House  of  Commons.  .  .  ." 32 

Still  another  member,  Watson,  asserted  that  100  coloniza- 
tion companies  had  monopolized  large  tracts  of  land  in  Mani- 
toba and  the  North  West  for  a  number  of  years.33 

32  Debates,  House  of  Commons,  etc.,  1891,  Vol.  II,  p.  3481. 

sslbid.,  p.  3506.  In  his  Reminiscences  Sir  Richard  Cartwright  nar- 
rates an  instance  showing  how  members  of  both  political  parties  were 
deep  in  land  colonization  schemes.  After  the  general  election  of  1882, 
when  Sir  John  Macdonald  carried  the  constituency  of  Lennox,  Cart- 
wright  purposed  a  contest,  the  expenses  to  be  guaranteed  by  Allison  the 
defeated  candidate,  and  by  himself.  "  To  our  no  small  surprise,  while 
they  all  admitted  that  the  corruption  had  been  most  gross,  we  found  that 
there  was  a  great  reluctance  to  take  any  action.  After  the  meeting  ad- 
journed, we  sent  for  a  very  shrewd  friend  of  ours  who  knew  the  parties, 
and  asked  what  it  all  meant.  'Oh,'  he  said,  'that  is  very  easily  ex- 
plained. Almost  every  one  of  these  people  is  interested  in  one  coloniza- 
tion company  or  another,  and  Sir  John's  friends  have  been  pointing  out 
to  them  that  it  was  to  their  interest,  now  that  he  is  the  Minister  of  the 
Interior,  to  put  him  under  an  obligation  to  them  and  have  him  as  Mem- 
ber for  Lennox.'  We  prosecuted  Sir  John  forthwith  without  any 
further  reference  to  the  committee  and  brought  out  such  a  scandalous 
state  of  things  that  his  counsel,  the  late  Mr.  Dalton  McCarthy,  was  only 
too  glad  to  confess  judgment  and  to  vacate  the  seat  if  the  personal 
charges  involving  disqualification  were  withdrawn.  But  my  point  is 
this :  Here  in  one  small  constituency  were  over  twenty  of  the  leading 
Reformers  interested  in  these  land  schemes  and  more  or  less  dependent, 
or  so  they  thought,  on  the  good-will  of  the  Minister  of  the  Interior. 
Doubtless  as  many  of  Sir  John's  supporters  were  in  the  same  situation. 
There  were  a  large  number  of  these  companies  floated,  most  of  them 
with  a  large  number  of  subscribers." — Reminiscences,  pp.  242-243. 


APPROPRIATION  OF  COAL  AND  TIMBER  LANDS          319 

Thus  the  debate,  full  of  acerbity,  went  on  amid  charges  and 
counter  charges.  Finally,  Charlton's  motion  to  condemn  the 
practices  in  question  was  defeated  by  a  vote  of  100  to  Si.3* 

34  Debates,  House  of  Commons,  etc.,  Session,  1891,  Vol.  II,  p.  3507. 


CHAPTER  XVII 
DISTRIBUTION  OF  RAILWAY  SUBSIDIES 

The  circumstances  of  the  promotion  of  the  Caraquet  Rail- 
way and  the  operations  of  its  chief  promoter  and  owner,  K. 
F.  Burns,  member  of  the  House  of  Commons  for  Gloucester, 
occupied  discussion  in  Parliament  on  May  8,  1890.  This  was 
a  railway  chartered,  in  1874,  to  run  from  a  point  near  Bathurst 
to  Caraquet  in  New  Brunswick.  This  distance  originally  was 
to  be  about  60  miles. 

Caraquet  Railway  Transaction 

Directing  his  attention  to  this  transaction,  Edward  Blake 
said  that  Burns  represented  and  owned  eleven-twelfths  of  the 
subsidies  that  the  Caraquet  Railway  Company  had  received. 
The  Dominion  Government,  Blake  said,  had  given  a  subsidy 
of  $224,000,  of  which  Burns'  eleven-twelfth  share  would  be 
$205,000,  and  the  Government  of  the  Province  of  New  Bruns- 
wick had  donated  a  subsidy  of  about  $180,000  of  which  Burns' 
share  would  be  $165,000.  These  amounts,  Blake  figured,  made 
a  total  from  both  Governments  "  for  the  corporate  Burns  "  of 
$37o,ooo.1 

In  a  sort  of  prefatory  style,  doubtless  to  let  other  members 
know  that  this  was  not  a  personal  attack  upon  Burns,  nor 
solely  applying  to  him,  Blake  quoted  J.  C.  Rykert,  then  a 

1  Debates,  House  of  Commons,  Dom.  of  Canada,  Session  1890,  Vol.  II, 
p.  4611.  The  subsidy  sums  as  stated  by  Blake  were  exact;  the  amounts 
are  so  entered  in  the  annual  Railway  Statistics  ofjhe  Dom.  of  Canada. 

320 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  32! 

member  of  the  House  of  Commons,  as  saying  in  an  address 
to  his  (Rykert's)  constituents,  "  Why  I  should  be  singled 
out  for  public  censure  when  there  are  dozens  of  members  in 
the  same  House,  who  not  only  have  applied  for  and  obtained 
limits  for  themselves,  but  sit  there  daily  voting  money  into 
their  own  pockets,  I  cannot  understand."  2 

Blake  proceeded.  He  told  how  Burns  was  the  president, 
contractor,  financier  and  altogether  the  general  all-in-all  of 
his  own  company.  The  capital  stock  of  the  Caraquet  Railway 
Company  had  been  subscribed  to  the  full  amount  of  $950,000, 
of  which  about  $751,000  had  been  paid  in. 

Ways  of  Railway  Contractors 

"I  believe,"  Blake  went  on,  "that  the  whole  cost  of  the 
enterprise,  rails  included,  at  fair  values,  with  contractors' 
profits,  was  provided  foi  out  of  the  Government  subsidies  and 
the  sale  in  bonds  in  England  for  £100,000  sterling;  and  not 
merely  was  the  whole  cost,  at  fair  values,  with  contractors* 
profits,  so  provided,  but  there  was  left  an  excess  of  a  very 
considerable  amount,  which  went  into  the  pockets  of  the 
honorable  member  for  Gloucester.  So  that  he  received  eleven- 
twelfths  of  the  stock,  and  he  made  a  considerable  fortune  out 
of  his  construction  account. 

"  It  is  quite  possible  to  project  a  railway  as  disastrously 
as  this  railway  has  resulted,  and  yet  make  a  fortune  of  the 
undertaking.  ...  I  believe  the  honorable  member  paid  a  very 
large  proportion,  probably  about  three-fourths,  of  the  wages 
and  local  supplies  in  truck  out  of  his  store ;  and  that  he  issued 
a  sort  of  ticket,  which  passed  as  local  currency  in  the  country 
to  some  extent,  and  by  this  means  of  paying  in  truck  he  made 
a  very  considerable  addition  to  his  profits."  B 

Why,  asked  Blake,  was  the  Caraquet  Railway,  projected 

2  Ibid.,  p.  4611.  *Ibid.,  p.  4612. 


322  DISTRIBUTION   OF   RAILWAY   SUBSIDIES 

at  first  to  cover  60  miles,  represented  as  being  70  miles  ? 4 
"  The  honorable  member  for  Gloucester  [Burns]  has  a  couple 
of  mills  in  the  neighborhood.  To  one  of  these  a  branch  some- 
where about  a  mile  long  was  built,  which  forms  part  of  the 
mileage,  and  to  reach  the  other  mill  he  deflected  the  road, 
increasing  its  length  in  that  way,  five  or  six  miles."  The 
true  value  of  the  work,  including  contractors'  profit,  Blake 
said,  was  a  great  deal  under  $8,000  a  mile,  instead  of  $22,000 
or  $23,000  a  mile.  Blake  also  pointed  out  that  in  1888  there 
were  five  employes  injured  and  eight  killed  on  that  railway; 
perhaps  it  was  due  to  bad  construction.5 

Burns  made  an  elaborate  defense,  not  denying  that  his  work- 
ers got  supplies  from  the  stores  of  K.  F.  Burns  and  Company, 
but  asserting  that  he  paid  them  monthly  in  cash.  His  ex- 
planations made  a  poor  impression. 

Sir  Richard  Cartwright  attacked  the  subject.  Saying  that 
Mr.  Blake  and  William  Mulock  deserved  thanks  for  exposing 
the  transaction,  he  went  straightway  into  a  denunciation  of 
"  the  thoroughly  rotten  system,"  accusing  Premier  Macdonald 
of  maintaining  himself  in  power  chiefly  by  the  following  four 
methods : 

"  First,  by  the  free  distribution  of  the  public  domain  to 
certain  favored  parties,  of  which  we  had  a  recent,  eminent  and 
notorious  example;  next,  I  was  going  to  say  of  thinly-dis- 
guised bribery,  but  I  will  say  instead,  by  a  system  of  open 
bribery  on  the  part  of  contractors  in  testimonials  and  other- 
wise; next  by  a  system  of  tariff  corners  and  subsidies;  and 
lastly  by  the  method  of  which  we  had  had  so  notable  an 

4  As  finally  construced  it  was  68  miles.    Blake  could  not  be  accused 
of  unreasonable  hostility  to  railroad  construction;  his  objections  were 
to  the  methods  used  to  get  the  subsidies.    He  himself  was  a  stock- 
holder in  various  corporations ;  after  his  death,  his  estate  was  appraised, 
in  1912,  at  nearly  $300,000,  more  than  half  of  which  was  in  stocks. 
These  he  acquired  in  legitimate  ways. 

5  Debates,  House  of  Commons,  etc.,  1890,  Vol.  II,  pp.  4616-4617. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  323 

illustration  just  now,  the  method  of  railway  subsidies  among 
various  constituencies  and  among  various  members  of  this 
House.  .  .  ."6 

Where  Did  a  Certain  $800,000  Go? 

Dissecting  Burns'  explanation,  Cartwright  inquired  that  if 
Burns'  assertion  was  true  that  he  got  only  $600,000  of  the 
available  funds,  then  who  pocketed  the  other  $800,000  of  the 
$1,400,000  that  the  railway  was  said  to  have  cost?  Cart- 
wright  was  exceedingly  insistent  as  to  the  destination  of  this 
$800,000;  he  demanded  to  know  what  became  of  it,  but  could 
get  no  real  enlightenment.  The  English  stockholders,  he  said, 
were  induced  to  put  £80,000  or  £100,000  in  the  railway,  upon 
the  representation  that  there  would  be  a  profit  of  £1,000  a 
mile,  but  instead  had  met  only  a  dead  loss.7 

Another  denunciation  of  the  transaction  came  from  P. 
Mitchell,  member  of  the  House  of  Commons  for  Northumber- 
land. He  said  that  members  of  Parliament  were  corrupted 
by  subsidies,  local  improvement  appropriations  and  other 
means  which  formed  "  one  of  the  greatest  sources  of  bribery 
and  corruption  ever  initiated  in  any  country."  He  denounced 
it  as  "  a  cursed  system,  a  system  which  has  corrupted  the 
representatives  of  those  constituencies."  8 

A  Series  of  Charges 

Presently,  there  came  an  unfolding  of  another  serious  scan- 
dal. On  May  n,  1891,  J.  Israel  Tarte,  a  member  of  the 
House  of  Commons,  formally  made  a  series  of  specific  charges 
against  Thomas  McGreevy,  a  conspicuous  member  of  the 
House.  McGreevy  had  long  been  a  railroad  promoter;  he 
had  been  associated  as  far  back  as  1869  with  the  Hon.  Hector 
L.  Langevin  and  other  members  of  Parliament  in  securing 

6  Ibid.,  p.  4631.  7  Ibid.,  p.  4633.  8  Ibid.,  p.  4644. 


324  DISTRIBUTION   OF  RAILWAY  SUBSIDIES 

for  themselves  the  charter  of  the  Levis  and  Kennebec  Rail- 
way,9 he  had  been  a  large  railroad  contractor  in  the  Province 
of  Quebec,  and  for  a  considerable  time  was  chairman  of  the 
Railway  Committee  of  the  House  of  Commons. 

Tarte's  charges  were  as  follows: 

That  in  order  to  get  Thomas  McGreevy's  influence  in  Par- 
liament, the  firm  of  Larkin,  Connolly  and  Company,  dredg- 
ing contractors,  took  in  his  brother,  Robert  McGreevy,  as 
a  partner,  giving  him  an  interest  of  30  per  cent,  in  the 
firm. 

That  McGreevy  consented  to  this  arrangement,  saying  that 
he  had  first  consulted  Sir  Hector  L.  Langevin,  the  Minister 
of  Public  Works,  and  secured  his  consent.  Langevin  had 
occupied  that  office  for  almost  20  years. 

That  at  the  same  time,  Thomas  McGreevy  was  a  member 
of  the  Quebec  Harbor  Commission,  and  gave  his  help,  in  an 
undue  manner,  to  the  firm  of  Larkin,  Connolly  and  Company 
to  secure  the  dredging  contract. 

That  by  manipulation  and  other  means  on  Thomas  Mc- 
Greevy's part,  the  firm  in  question  obtained  the  contract,  for 
which  $375,000  had  been  voted  by  the  Parliament  of  Canada 
in  1882. 

That  a  few  days  after  Larkin,  Connolly  and  Company  had 
secured  the  contract  in  1883,  "  the  sum  of  $25,000  was,  in 
fulfillment  of  the  corrupt  arrangement  above  stated,  paid  to 
the  said  Thomas  McGreevy  in  promissory  notes  signed  by  the 
firm  of  Larkin,  Connolly  and  Company  which  said  notes  were 
duly  paid." 

That  on  or  about  the  same  date,  June  4,  1883,  a  sum  °^ 
$1,000  was  paid  by  the  firm  of  Larkin,  Connolly  and  Company 

9  Statutes  of  Quebec,  1869,  pp.  217-218.  The  Levis  and  Kennebec 
Railway,  projected  for  90  miles,  was  voted  a  Government  subsidy  of 
$360,000  of  which  nearly  the  whole  was  paid.  This  railway  became 
part  of  the  Quebec  Central  Railway. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  325 

towards  the  "  Langevin  Testimonial  Fund  "--a  fund  intended 
as  a  gift  to  Sir  Hector  Langevin. 

That  in  1884  Thomas  McGreevy  received  another  corrupt 
sum  of  $22,000  for  getting  for  the  firm  of  Larkin,  Connolly 
and  Company  the  contract  for  the  completion  of  the  Graving 
Dock  of  Levis. 

That  to  get  the  contract  for  the  completion  of  Graving 
Dock  at  Esquimault,  B.  C.  in  1884,  the  firm  of  Larkin,  Con- 
nolly and  Company  gave  Robert  McGreevy  a  20  per  cent, 
interest  in  the  firm ;  and  that  on  the  suggestion  of  Thomas  Mc- 
Greevy, the  firm  of  Larkin,  Connolly  and  Company  "  ap- 
proached "  members  of  Parliament ;  that  certain  members  of 
the  firm  declared  that  these  members  asked  for  a  certain  sum 
of  money  to  exert  their  influence  for  the  firm,  and  that  the 
firm  had  agreed  to  give  it  to  them;  that  McGreevy  corruptly 
tried  to  get  dismissed  certain  public  officers  who  had  incurred 
the  ill-will  of  the  firm,  and  have  them  replaced  by  others  who 
would  suit  the  firm's  interests. . 

That  in  1886-1887,  Thomas  McGreevy  arranged  to  get 
$25,000  from  the  firm  on  condition  that  he  would  get  for  that 
firm  at  an  exorbitant  price,  much  above  the  lowest  bids  ten- 
dered, the  contract  for  the  dredging  of  the  Wet  Basin  in  the 
harbor  of  the  City  of  Quebec,  and  that  McGreevy  corruptly 
received  $27,000  as  his  share. 

That  from  the  year  1883  to  1890,  both  inclusive,  Thomas 
McGreevy  received  from  the  firm  of  Larkin,  Connolly  and 
Company  and  from  his  brother  Robert  McGreevy,  a  sum  of 
about  $200,000. 

That  during  the  forementioned  period  Thomas  McGreevy 
was  the  agent  and  paid  representative  of  the  firm  of  Larkin, 
Connolly  and  Company  on  the  Quebec  Harbor  Board  of  Com- 
missioners in  Parliament,  in  connection  with  the  Department 
of  Public  Works. 

That  Thomas  McGreevy,  on  several  occasions,  demanded 


326  DISTRIBUTION    OF   RAILWAY   SUBSIDIES 

sums  of  money  from  the  firm  of  Larkin,  Connolly  and  Com- 
pany in  the  name  of  Sir  Hector  Langevin,  Minister  of  Public 
Works. 

That  from  1882  to  1891,  Thomas  McGreevy  had  always 
lived  when  in  Ottawa  in  the  same  house  as  the  Minister  of 
Public  Works,  "  and  that  he  seems  to  have  done  so  in  order 
to  put  in  the  mind  of  Larkin,  Connolly  and  Company  the  im- 
pression that  he  had  over  said  honorable  Minister  an  abso- 
lute control,  and  that  he  was  acting  as  his  representative  in 
his  corrupt  transactions  with  them." 

Tarte  further  charged  that  certain  members  of  the  firm  of 
Larkin,  Connolly  and  Company  "  paid  and  caused  to  be  paid 
large  sums  of  money  to  the  honorable  Minister  of  Public 
Works  out  of  the  proceeds  of  the  said  contracts,  and  that 
entries  of  the  said  sums  were  made  in  the  books  of  that 
firm."  10 

Charges  Substantially  Proved 

A  Select  Committee  to  inquire  fully  into  the  charges  was 
demanded  by  Mr.  Tarte.  After  the  committee  had  held  100 
sittings  and  taken  a  mass  of  testimony,  Mr.  Girouard,  chair- 
man of  the  Select  Committee,  reported  to  the  House  of  Com- 
mons, that  the  Committee  had  "  come  to  the  conclusion  that 
the  charges  made  by  the  honorable  member  for  Montmorency 
(Mr.  Tarte)  were  substantially  —  in  fact  amply  —  proved  as 
far  as  the  Hon.  Thomas  McGreevy  is  concerned,  but  as  far 
as  Sir  Hector  Langevin  is  concerned,  the  members  of  the  Com- 
mittee came  to  a  division.  The  minority  report  concluded 
that  Sir  Hector  Langevin  knew  of  the  conspiracy  with  Lar- 
kin. Connolly  and  Company,  but  the  majority  would  not  ar- 
rive at  that  conclusion."  As  to  Thomas  McGreevy's  cor- 

10  These  charges,  as  above  given,  are  set  forth  in  full  in  Debates  in 
the  House  of  Commons,  Dom.  of  Canada,  Session  1891,  Vol.  I,  pp.  149- 
152. 


DISTRIBUTION   OF  RAILWAY  SUBSIDIES  327 

rupt  acts,  the  Select  Committee's  report  was  unanimous.11 
Chairman  Girouard  reported  that  the  total  amount  of  the 
contracts  awarded  to  Larkin,  Connolly  and  Company  was  $3,- 
138,234;  that  these  contracts  extended  over  a  period  from 
1878  to  1891 ;  that  the  contractors  received  $735,061  in  profits; 
and  that  in  addition  to  these  profits,  sums  totaling  $170,407 
were  paid  out  in  donations  for  political  and  other  purposes.12 
The  evidence  showed  that  not  only  money  but  diamonds  and 
other  valuable  presents  were  given  to  officials  in  the  Public 
Works  Department,  and  that  large  sums  went  to  a  newspaper 
run  in  Quebec  by  Langevin's  son-in-law. 

The  report  of  the  majority  of  the  Select  Committee  was 
adopted  after  a  long  and  bitter  debate.  Meanwhile,  Langevin 
had,  on  August  n,  1891,  resigned  as  Minister  of  Public 
Works;  and,  on  September  29,  1891,  Thomas  McGreevy  was 
expelled  from  the  House  of  Commons.13  Later  he  went  to 
jail. 

McGreevy  Made  a  Scapegoat 

According  to  Sir  Richard  Cartwright,  "  there  was  a  gen- 
eral and  perfectly  correct  opinion  that  Mr.  McGreevy  had 
been  made  a  scapegoat,  and  that  he  was  really  far  less  culpable 
than  many  of  the  Ministers  themselves."  14  Elsewhere,  Sir 
Richard  wrote  that,  "  Mr.  McGreevy  was  one  of  those  men 
who  influence  the  course  of  public  affairs  ten  times  more  than 
any  Cabinet  Minister,  but  who  are  often  never  heard  of  out- 
side a  very  limited  circle.  Mr.  McGreevy  was  in  many  ways 
a  remarkable  man.  He  was  thoroughly  conversant  with  every 
irregular  transaction  which  occurred  in  several  great  spend- 
ing departments  over  a  wide  area  for  a  long  space  of  time,  and 
above  all,  in  the  case  of  Sir  Hector  Langevin's,  namely,  the 

11  Debates,  House  of  Commons,  etc.,  Session  1891,  Vol.  Ill,  p.  5778. 

«/&«*.,  pp.  5781-5782. 

^Ibid.,  p.  6286. 

14  Reminiscences,  p.  355. 


328  DISTRIBUTION   OF   RAILWAY   SUBSIDIES 

Department  of  Public  Works.  .  .  .  Millions  of  corruptly 
gotten  money,  to  be  expended  for  yet  more  corrupt  purposes, 
passed  through  his  hands,  and  yet  for  all  that  I  believe  Mr. 
McGreevy  was  by  far  the  most  honest  man  of  the  lot  —  which 
was  perhaps  the  reason  he  was  made  the  scapegoat." 

Then  saying  that  McGreevy  divulged  only  a  fraction  of  the 
facts  he  knew,  Sir  Richard  Cartwright  went  on : 

"  All  sorts  of  pressure  was  brought  to  bear  on  him,  and  he 
may  have  become  convinced  that  further  disclosures  would 
hurt  some  parties  whom  he  did  not  wish  to  injure.  One 
thing  I  do  know,  that  when  Mr.  McGreevy  was  in  durance 
nothing  could  exceed  the  solicitude  for  his  welfare  displayed 
by  certain  members  of  the  ministry.  There  were  few  days 
during  the  time  he  spent  in  jail  on  which  Mr.  McGreevy,  if  so 
disposed,  could  not  have  held  a  Cabinet  Council  in  the  corridor, 
as  far  as  the  requisite  number  to  form  a  quorum  was  con- 
cerned." 15 

Mr.  Murphy's  Opinion 

The  remaining  question  is,  How  was  it  that  such  facts  as 
were  brought  out  were  divulged?  Who  originally  informed, 
and  why?  Here  we  shall  have  to  turn  to  an  interview  with 
Owen  E.  Murphy,  published  in  the  New  York  Times,  and  re- 
published  in  the  Toronto  Globe,  issue  of  November  23,  1891. 
Murphy  had  been  an  Excise  Commissioner  in  New  York  City, 

15  Ibid.,  pp.  334-335.  Cartwright  wrote  that  later,  when  the  party 
to  which  he  belonged  came  into  power,  it  could,  had  it  been  so  pleased, 
obtained  and  made  public  the  whole  details,  but  that  the  chief 
consideration  which  had  most  influence  was  "that  the  exposures  which 
had  already  taken  place  had  damaged  the  reputation  of  Canada  to 
an  enormous  extent,  and  we  dreaded  the  result  of  these  further 
revelations."  Personally,  Cartwright  did  not,  he  wrote,  altogether  ap- 
prove this  policy  of  suppression.  But  his  objections  were  not  based 
upon  the  desire  to  let  the  public  know  to  what  vast  extent  graft  and 
corruption  had  been  used  to  acquire  public  property  and  great  fortunes, 
but  upon  the  partisan  aim  to  let  the  Canadian  public  "  understand  how 
and  by  what  means  our  opponents  had  regained  power  in  1878  and 
kept  it  till  1896." 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  329 

and  had  hurriedly  left  there  in  1877  with  a  shortage  of  $50,- 

000  in  his  official  accounts.     He  went  to  Canada,  and  became 
a  contractor  associated  with  Robert  McGreevy.     In  1891  he 
returned  to  New  York  City  with  the  announcement  that  he 
intended  to  make  restitution  to  New  York  City  for  the  old 
shortage,  and  reside  in  that  city  permanently.     He  was  inter- 
viewed by  a  reporter  for  the  New  York  Times. 

11  His  views  on  Canadian  politics  and  Canadian  politicians 
are  not  flattering  to  us,"  said  the  Toronto  Globe  editorially. 

"  '  We  bribed  them  all/  he  said  with  a  smile,  '  and  generally 
acquired  nearly  everything  in  sight.  We  literally  owned  the 
Province.  Public  officials  in  Canada,  so  far  as  my  experience 
goes,  do  not  have  that  suspicious  hesitancy  in  accepting  money 
that  characterizes  some  officials  in  this  country.  The  Lange- 
vin  crowd  did  not  scruple  to  take  all  they  could  get/ 

"  In  Mr.  Murphy's  estimation  —  and  as  a  veteran  Tam- 
manyite  his  opinion  is  worth  something  —  the  '  Langevin 
crowd  is  worse  than  the  Tweed  gang  ever  was/  He  spoke 
pathetically  of  the  dissension  between  the  McGreevys.  '  The 
quarrel  was  really  one  over  the  division  of  the  spoils/  Had 
the  brothers  remained  on  friendly  terms,  and  had  he  and  the 
Connollys  kept  out  of  each  other's  hair,  they  '  would  have 
owned  nearly  the  whole  of  Canada/  The  reporter  asked  him 
for  an  expert  judgment  on  the  moral  condition  of  the  Cana- 
dian electorate  as  compared  with  that  of  New  York  electors. 
His  reply  was :  '  Votes  cost  more  than  in  New  York.  I 
figured  in  one  election  where  I  myself  paid  out  $6,500  for  a 
certain  candidate,  and  the  votes  cost  from  $25  to  $30  apiece. 

1  considered  this  price  somewhat  high,  but  we  had  to  have 
them/  " 16 

16  An  editorial  in  the  Toronto  Globe,  December  I,  1891,  quoted  a 
Quebec  newspaper,  LeCorrier  de  St.  Hyacinthe  as  dividing  corrupt 
voters  into  three  herds  —  those  who  demanded  spot  cash  for  their 
votes ;  those  who  waived  cash,  but  insisted  on  something  being  done 
for  their  families,  such  as  the  payment  of  a  store  bill;  and  those  who 


33°  DISTRIBUTION   OF   RAILWAY   SUBSIDIES 

Premier  Sir  John  Macdonald  was  not  called  upon  to  face 
these  disclosures  and  the  series  of  further  revelations  now  fol- 
lowing. He  died  in  1891,  a  comparatively  poor  man;  nobody 
charged  that  he  had  been  personally  enriched  by  the  long-con- 
tinued system  of  corruption,  although  his  critics  had  asserted 
that  he  had  been  fully  willing  that  it  should  be  used  for  political 
campaign  purposes,  and  that  his  supporters  of  every  stripe 
from  the  railway  magnate  and  manufacturer  to  the  merest 
political  henchman  should  be  kept  in  line  by  the  lavish  grant- 
ing of  charters,  subsidies,  tariff  benefits,  contracts,  offices  or 
other  largess  proportionate  to  their  power  and  demands. 
J.  J.  C.  Abbott  succeeded  him  as  Prime  Minister. 

Bale  Des  Chaleurs  Railway  Disclosures 

Sharply  on  the  heels  of  the  McGreevy  disclosures,  came 
more  revelations.  This  scandal  dealt  with  the  means  used  to 
get  subsidies  for  the  Baie  des  Chaleurs  Railway,  in  the  Prov- 
ince of  Quebec. 

The  Baie  des  Chaleurs  Railway  Company  was  chartered  in 
1882.  In  that  year  and  succeeding  years,  various  Acts  were 
passed  by  the  Dominion  and  the  Province  of  Quebec  govern- 
ments allowing  the  company  total  cash  subsidies  of  $1,250,000, 
of  which  $894,175  was  paid  on  the  first  70  miles  constructed. 
Charles  N.  Armstrong  had  obtained,  in  1886,  the  contract  for 
constructing  100  miles  of  the  projected  189  miles ;  he,  in  turn, 
subcontracted  the  job.  A  contest  developed  between  two  sets 
of  capitalists  aiming  to  get  control  of  the  railway,  and  there 
was  danger  of  forfeiture  of  the  charter  for  non-fulfillment  of 

with  greater  modesty  refused  to  go  to  the  polls  unless  they  were 
paid  for  the  day's  expenses.  Another  Quebec  newspaper,  La  Justice, 
was  quoted  by  the  same  editorial  as  saying  that  19  in  every  20  of 
the  leading  politicians  calculated  upon  making  politics  pay  directly  or 
indirectly,  and  that  below  them  was  a  large  class  of  "workers"  who 
served  their  party  so  as  to  get  Government  offices  or  plunder  in  some 
form  and  who  stopped  at  nothing  to  win. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  33! 

conditions.  Armstrong  wanted  to  prevent  forfeiture,  and  at 
the  same  time  he  sought  to  collect  on  a  claim  for  $298,000 
which  he  presented  against  the  Quebec  Government. 

One  Ernest  Pacaud  agreed,  in  1891,  to  get  the  necessary 
official  action  favorable  to  Armstrong.  Although  his  claim  was 
for  $298,000,  Armstrong  did  not  expect  more  than  $75,000 
in  settlement.  He  readily  consented  to  give  Pacaud  $100,000 
if  Pacaud  should  get  $175,000  from  the  Quebec  Government. 
Thereupon,  Pacaud  at  once  set  matters  in  motion,  and  in  1891, 
the  Government  of  Quebec  by  an  Order-in-Council,  gave  an 
additional  subsidy  of  $50,000  and  also  800,000  acres  of  land 
convertible  into  cash  at  35  cents  an  acre  —  $280,000  cash  in 
all  as  the  proceeds  of  the  land  grant.17 


The  Corruption  Proved 

Charges  were  made,  in  1891,  that  this  transaction  had  been 
accomplished  by  means  of  corruption.  A  Royal  Commission, 
composed  of  Judges  Baby,  Davidson  and  Jette  was  appointed 
to  investigate.  On  October  23  and  24,  1891,  Ernest  Pacaud, 
the  intermediary  for  the  corruptionists,  made  a  full  confession 
before  the  Royal  Commission.18  Pacaud  confessed  that  he 
had  extorted  $100,000  from  Armstrong  to  effect  the  settle- 
ment of  Armstrong's  claim  against  the  Quebec  Government.19 

The  report  of  Judges  Baby  and  Davidson  showed  that  $175,- 
ooo  in  letters  of  credit  had  been  given  to  the  railway  con- 
tractors in  violation  of  the  Treasury  laws  without  the 
sanction  of  the  Lieutenant-Governor,  and  to  the  detriment  of 

17  Under  the  laws  of  the  Province  of  Quebec,  land  subsidies  were 
exchangeable  for  cash. 

18  See  Royal  Commission  Inquiry  into  the  Bale  des  Chaleurs  Rail- 
way Matter;  Reports,  Proceedings,  etc.,  1892,  pp.  361-488. 

19  Pacaud's    statement   of   the    disposition    of    the   $100,000   "  boodle 
fund"  was  full  and  explicit.    Most  of  it  went  to  politicians,  and  he 
stowed  away  $25,456  of  it  in  various  banks,  chiefly  in  the  National 
Park  Bank,  New  York  City. 


332  DISTRIBUTION   OF   RAILWAY   SUBSIDIES 

public  credit ;  the  misappropriation  of  a  sum  of  $175,000  from 
its  legislative  destination;  the  payment  made  to  Armstrong  to 
whom  nothing  was  due  by  the  Government  or  by  the  Company 
in  money;  the  division  of  the  $100,000  obtained  from  Arm- 
strong, and  its  employment  to  pay  the  debts  of  several  of  the 
Ministers  and  to  subsidize  several  members  of  the  Legislature, 
partisans  of  the  Cabinet.  Judges  Baby  and  Davidson  reported 
in  both  their  ad  interim  report  and  their  final  report  that  it 
was  not  proved  that  Premier  Mercier  and  some  of  the  other 
Cabinet  Ministers  knew  of  the  existence  of  the  bargain  be- 
tween Armstrong  and  Pacaud,  but  Judges  Baby  and  Davidson 
did  find  that  Provincial  Secretary  Charles  Langelier  "  had 
knowledge  of  the  source  whence  came  the  funds  out  of  which 
Mr.  Pacaud  paid  to  him  about  $9,000  for  his  personal  bene- 
fit." 20  Judge  Jette,  however,  held  that  Langelier  did  not 
know  the  source  of  the  money.21 

Such  facts  as  were  brought  out  in  Bay  des  Chaleurs  Rail- 
way transaction  made  a  deep  public  impression. 

An  Entire  Administration  Dismissed 

On  the  receipt  of  the  Royal  Commission's  ad  interim  report 
Lieutenant-Governor  A.  R.  Angers,  of  the  Province  of  Que- 
bec, dismissed  the  Mercier  administration  from  office,  on  De- 
cember 1 6,  1 89 1.22  Mercier's  political  opponents  pushed 
matters  to  the  point  of  haling  him  to  the  criminal  court  on 
charges  of  malfeasance  in  office,  but  the  charges  could  not  be 
proved,  and  he  was  acquitted. 

20  Royal  Commission  Inquiry  into  the  Bale  dcs  Chaleurs  Railway 
Matter,  etc.,  1892,  pp.  5,  89,  etc. 

^Ibid.;  p.  191. 

2-  Mercier  and  his  Cabinet  were  Liberals.  "  The  attacks  on  the 
Dominion  Government  had  been  largely  on  the  score  of  their  corrupt 
practices  in  this  very  province,  and  now  we  were  confronted  with 
evidence  that  the  Liberal  leaders  in  Quebec  were  as  bad  or  worse  than 
their  opponents." —  Sir  Richard  Cartwright's  Reminiscences,  p.  309. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  333 

Quebec  and  Lake  St.  John  Railway 

Only  a  few  months  later,  another  transaction  was  under  dis- 
cussion in  the  Dominion  House  of  Commons.  On  April  6, 
and  May  4,  1892,  James  D.  Edgar,  a  member  of  the  House, 
produced  charges  asserting: 

That  during  the  ten  years  from  1882  to  1891  inclusive,  the 
Quebec  and  Lake  St.  John  Railway  Company  23  received  from 
the  Dominion  Government  subsidies  of  more  than  $1,000,000, 
which  subsidies  were  voted  on  the  recommendation  of  Minis- 
ters of  the  Crown. 

That  during  this  whole  period — 1882  to  1891  —  Sir 
Adolphe  P.  Caron  was,  and  still  remained,  a  member  of  the 
Canadian  Government —  (he  was  at  different  times  Dominion 
Minister  of  Militia  and  Postmaster-General) — and  one  of 
the  Queen's  Privy  Councilors  for  Canada,  and  also  a  member 
of  the  House  of  Commons. 

That  also  during  this  period  Caron  knowingly  aided  arid 
participated  in  diverting  these  subsidies  from  the  purpose  for 
which  they  were  granted,  and  that  such  money  was  used  for 
election  purposes  to  aid  the  election  to  the  House  of  Commons 
of  Caron  and  other  supporters  of  the  Government. 

That  after  some  of  the  last  payments  were  so  obtained  and 
made,  Sir  Adolphe  P.  Caron,  "  in  consideration  thereof,"  cor- 
ruptly aided  and  assisted  the  Quebec  and  Lake  St.  John  Rail- 
way Company  to  obtain  further  and  other  subsidies  from  the 
Dominion  Parliament. 

That  since  October  6,  1885,  the  Temiscouata  Railway  had 
received  about  $649,200  in  subsidies  from  the  Dominion  of 
Canada,  and  that  Caron  aided  in  diverting  such  subsidies  for 
use  in  elections,  and  that  after  doing  this  Caron  —  so  it  was 
charged  —  had  corruptly  aided  and  assisted  the  Temiscouata 

23  This  was  a  railway  extending  286  miles  from  the  City  of  Quebec 
to  Chambord  Junction,  with  various  branches. 


334  DISTRIBUTION   OF   RAILWAY   SUBSIDIES 

Railway  Company  to  obtain  further  and  other  subsidies  from 
the  Dominion  Parliament.24 

These  charges,  put  in  such  specific  form  and  directly  nam- 
ing a  high  member  of  the  Government,  could  not  safely  be 
ignored  or  lightly  dismissed. 

One  aspect  of  these  charges  was  not  new.  In  the  debate 
of  May  28,  1886,  Caron  had  admitted,  in  reply  to  a  direct 
question  by  Edward  Blake,  that  he  was  then  a  member  of  the 
construction  company  building  the  Quebec  and  Lake  St.  John 
Railway.  This  railway  company,  Caron  had  then  explained, 
turned  over  its  subsidies  to  the  construction  company,  headed 
by  James  G.  Ross  and  composed  of  himself  and  others.25 

A  heated  debate  followed  the  introduction  of  Edgar's 
charges.  Sir  Richard  Cartwright  denounced  at  length  "  the 
system  of  organized  corruption,"  and  declared  that  "  taking 
the  railway  subsidies  as  a  whole,  they  have  been  one  of  those 
sources  of  organized  corruption  by  which  the  Government 
have  held  and  kept  their  power;  and  I,  for  my  part,  do  not 
wonder  in  the  least  at  finding  many  men  objecting  to  this  in- 
vestigation, knowing  as  I  do  how  these  same  railway  subsidies 
have  been  used  for  the  corruption  of  members  of  Parliament, 
how  they  have  been  tolled  for  the  private  advantage  of  mem- 
bers of  Parliament,  how  stock  formerly  worthless  has  been 
made  valuable  by  means  of  subsidies  got  by  political  influence, 
how  in  many  ways  they  have  been  used  in  debauching  repre- 
sentatives and  constituencies  alike.  .  .  ." 26 

24  The    Quebec    and    Lake    St.    John    Railway    Company    received 
bonuses   of   $1,233,943.50   from  the   Dominion    Government,  _  $2,368,816 
from  the  Quebec  Government,  and  $12,000  from  municipalities.    The 
Temiscouata  Railway — 113  miles  from  Riviere  du  Loup  to  Edmunston 
and  Connors,  N.  B.  —  received  bonuses  of  $645,950  from  the  Dominion 
Government,  $428,250  from  the  Governments  of  Quebec  and  of  New 
Brunswick   and    $25,000    from    municipalities. 

25  Debates,  House   of  Commons,  Dom.   of  Can.,  Session   1886,  Vol. 
II,   p.    1622.    Ross   was   a   conspicuous   Quebec   capitalist.    He   left  a 
fortune  of  about  $7,000,000. 

2QIbid.,   Session    1892,  Vol.   I,  pp.   1746-1747. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  335 

Altering  the  Original  Charges 

Finally,  a  Royal  Commission  was  appointed  to  investigate. 
On  September  13,  1892,  Mr.  Edgar  formally  protested  to  the 
Commission  that  the  charges  he  made  were  definite  and  spe- 
cific and  complaining  that  the  substitute  motion  which  had 
passed  the  House  (in  place  of  his  motion  which  was  defeated) 
"  did  not  state  the  full  charges  and  was  designed  to  elude  and 
defeat  the  ends  of  justice."  This  substitute  motion  was  made 
by  Hon.  Mackenzie  Bowell,  a  colleague  of  Caron  in  the  Min- 
istry. Edgar  further  protested  that  "my  charges  are  not 
fairly  stated  to  you." 

The  accusation  made  by  Edgar  that  the  charges  brought 
by  him  had  been  distorted,  caused  a  great  stir,  but  his  pro- 
tests were  of  no  avail. 

James  G.  Scott,  secretary  of  the  Quebec  and  Lake  St.  John 
Railway  Company,  testified  before  the  Royal  Commission  that 
Caron  had  been,  since  1879,  a  shareholder  in  the  company 
constructing  that  railway,  and  that  other  members  of  Parlia- 
ment were  shareholders.  Caron,  however,  was  not  a  member 
of  the  railway  company.  Scott  further  testified  that  in  nu- 
merous applications  for  Government  subsidies  he  often  saw 
Caron  who  gave  "  loyal  assistance."  Still  further,  Scott  tes- 
tified that  the  firm  of  Andrews,  Caron  and  Andrews  had  been 
for  years  solicitors  for  the  Quebec  and  Gosford  Railway.27 

Many  other  witnesses,  including  Thomas  McGreevy,  were 
examined;  McGreevy's  testimony  was  definite,  but  other  wit- 
nesses were  mainly  railway  contractors  and  associates,  and 
much  of  their  testimony  was  more  or  less  of  a  negative  char- 
acter. 

The  Royal  Commission  handed  in  the  evidence  with  exhibits, 
refraining  from  making  any  comments  whatever. 

"Sessional  Paper  No.  27,  1892,  pp.  98-109.  This  document  con- 
tains the  full  evidence. 


336  DISTRIBUTION    OF   RAILWAY   SUBSIDIES 

Sir  Adolphe  Caron  Remains 

No  action  adverse  to  Caron  was  taken;  he  remained  in  the 
Dominion  Government  Ministry  until  1896. 

The  political  opponents  of  Caron  and  his  party  regarded 
the  substitute  motion  upon  which  the  Royal  Commission  had 
to  act,  as  a  "  white-washing  "  one.  According  to  Sir  Richard 
Cartwright  "the  evidence  was  overwhelming,"  and  Caron 
dared  not  prosecute  the  Toronto  Globe  for  publishing  two 
whole  pages  of  fac-similes  of  documents  implicating  him  in 
transactions  with  Thomas  McGreevy.  Sir  John  Thompson 
(then  Prime  Minister)  did  not  "  dare  compel  Sir  Adolphe 
Caron  to  resign.  To  have  done  so  would  have  caused  a  split 
among  his  Quebec  supporters  which  would  have  wrecked  his 
Government  at  once,  to  say  nothing  of  the  certainty  of  being 
followed  by  other  and  even  uglier  revelations."  28 

Comments  of  the  British  Press 

The  Pall  Mall  Gazette  declared  that  "  a  more  sordid  spec- 
tacle of  corruption  has  never  been  presented  to  a  free  people. 
.  .  .  Political  life  in  the  United  States  is  not  particularly  pure, 
but  we  would  be  exceedingly  surprised  if  the  Canadian  record 
could  be  beaten." 

The  Speaker,  September  12,  1891,  thus  commented:  "  The 
undisputed  facts  are  bad  enough.  The  defense  constantly  set 
up  when  large  sums  are  traced  from  a  contractor  or  office 
seeker  to  a  legislator  is  that  the  money  was  not  for  the  re- 
cipient's private  benefit,  but  for  legitimate  political  purposes. 
That  this  is  reckoned  any  defense  at  all  shows  the  extent 
;to  which  the  political  conscience  in  Canada  has  been 
blunted.  .  .  ."  Of  Abbott,  the  successor  of  Macdonald  as 
Prime  Minister  of  Canada,  the  Speaker  said  that  he  was  "  the 

28  Reminiscences,  p.  332. 


DISTRIBUTION   OF   RAILWAY   SUBSIDIES  337 

man  who  in  1872  negotiated  the  great  bribery  scheme  [the 
Pacific  Railway  transaction]  by  which  Sir  John  Macdonald 
was  driven  disgraced  from  office.  .  .  ." 

"  No  honest  Canadian,"  said  the  London  Standard,  Septem- 
ber 25,  1891,  "  can  read  the  testimony  without  feeling  that 
corruption  has  saturated  departmental  and  Parliamentary 
life.  .  .  ." 

The  London  Despatch,  October  4,  1891,  describing  the  sys- 
tem of  corruption  in  Canada,  remarked:  "...  Yes,  some 
have  been  punished  —  the  small  fry  who  were  not  in  a  posi- 
tion to  steal  much.  But  the  conspicuous  thieves  .  .  .  where 
are  they?  Living  on  their  stealings,  some  of  them  even  blaz- 
ing with  decorations  bestowed  upon  them  by  the  Queen  — 
quite  comfortably  either  in  Canada  or  the  United  States." 

The  Saturday  Review,  September  12,  1891,  advanced  the 
opinion  that  in  the  field  of  corruption,  Canada  could  "  mod- 
estly challenge  comparison  "  with  the  United  States.  "  Her 
opportunities  and  means  are  not  so  great  as  those  wielded  by 
the  lobbyists  and  log-rollers  of  Washington,  or  the  bosses  and 
wire-pullers  of  New  York,  but  the  most  has  been  made  of 
them.  .  ." 


END  OF   VOLUME   I 


NOTE. — The  Index  for  Volumes  I  and  II  will  be  found  in  Vol.  II. 


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